All owners of private land and some occupiers of crown land (see below) must pay rates and charges levied by local councils. Some exemptions are allowed to community organisations such as charities, returned services bodies and religious bodies, and some concessions are provided for pensioners and others deemed to be in need. Councils use the funds they raise to pay for amenities such as local roads and footpaths, parks and gardens and other community facilities.
Rates are fixed annually by your council on the basis of the income it thinks it will need. The amount you pay in rates will be based on a valuation of your property completed by an official valuer appointed by the council.
Councils decide between three types of valuation defined in the Valuation of Land Act 1960: site value - the value of the land without any improvements (buildings and so on); capital improved value - the total market value of the property including land and improvements; net annual value - the estimated net annual rental of the property except for residential and farm property where the net annual value must be five per cent of the capital improved value.
The council must tell you the type of valuation it has used to fix your rates. In recent years the capital improved value system has been by far the most common. Under the Valuation of Land Act, your property will be classified according to its use: residential, commercial, industrial, recreational or farm.
The Local Government Act 1989 also allows councils to set a different rate in the dollar for these different land uses if they choose the capital improved value. This allows councils to set a lower rate in the dollar for farm and residential land than for commercial and industrial land.
The Victorian government has properties revalued every two years. The purpose of regular property revaluations is to maintain relativity between properties so that the burden of rates falls fairly on property owners. When all properties in a municipality are revalued, changes in valuation do not necessarily mean corresponding changes in the rates payable. The change in the valuation of your property from one valuation to another needs to be compared with the change in the valuations of all the other properties in your municipality before the effect on your rates can be known.
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