Victorian Statutory Revaluation
Valuer-General Victoria and Municipal Group of Valuers
Guidelines on Valuation Methodology for
Non-rateable Leviable Properties
Introduction
The guideline is for the purpose of valuing non-rateable leviable properties.
In accordance with the Fire Services Property Levy Act 2012 (Fire Services Property Levy Act) nonrateable leviable properties are to be valued for the purposes of the fire services levy (FSL). Land
currently not rated will be valued for the purpose of the FSL under provisions of the Valuation of
Land Act 1960 (Valuation of Land Act).
The aim of the paper is to provide guidance on the valuations of:
 places of worship, such as churches, chapels, mosques, synagogues and temples.
 private schools
 civic centres including
o council offices
o town halls
o libraries
o community buildings.
The guideline needs to be used in conjunction with General Provisions for Specialist Guidelines,
which refers to the general requirements, legislation and procedures relating to all statutory
valuations.
Definition
The Victorian Planning Provisions provide definitions for the following land use terms:




1
Education centre1
Land used for education, such as a:
o business college
o employment training centre,
o primary school,
o secondary school,
o tertiary institution.
Place of worship
Land used for religious activities, such as a church, chapel, mosque, synagogue and
temple.2
Place of assembly
Land where people congregate for religious or cultural activities, entertainment or
meetings. 3
Restricted place of assembly
Land used by members of a club or group; or, by members' guests for religious or cultural
activities, entertainment, or meetings. It may include food and drink for consumption on
the premises and gaming.4
Department of Planning and Community Development 2010, Department of Planning and Community Development,
Victoria, viewed 28 September 2012, 70 Definitions – 74 Land Use Terms 08/08/2012
http://planningschemes.dpcd.vic.gov.au/VPPs/
2
Department of Planning and Community Development 2010, Department of Planning and Community Development,
Victoria, viewed 28 September 2012, 70 Definitions – 74 Land Use Terms 08/08/2012
http://planningschemes.dpcd.vic.gov.au/VPPs/
3
Ibid
4
Ibid
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Other definitions and industry terms
The following definitions and industry terms are in alphabetical order.

Cathedral – the principal church of a diocese, with which the bishop is officially associated. 5

Chapel – a part of a large church or cathedral with its own altar and dedication.6

Church – a building used for public Christian worship. 7

Civic centre - Municipal offices, council chamber and associated community facilities,
such as:
 local government offices
 town hall
 library,
 community building.

Indoor recreation facility - A building used for indoor leisure, recreation, or sport.8

Leisure and recreation - Land used for leisure, recreation or sport.9
 Manse – a house provided for a minister of certain Christian churches.10

Minor sports and recreation facility - Land used for leisure, recreation or sport, without
substantial provision for spectators, and which is usually open to non-paying spectators.11

Mosque – a Muslim place of worship.12

Open sports ground - Land used for sport, but which is available for informal outdoor leisure
or recreation when not being used or prepared for an organised game. It may include lights,
change rooms, pavilions and shelters.13

Outdoor recreation facility - Land used for outdoor leisure, recreation, or sport. 14

Pipe organ - a large musical instrument having rows of pipes supplied with air from bellows
(now usually electrically powered), and played using a keyboard or by an automatic
mechanism. The pipes are generally arranged in ranks of a particular type, each controlled by
a stop, and often into larger sets linked to separate keyboards15

Presbytery – the house of a Roman Catholic parish priest. 16

Rectory – a rector’s house – a Church of England benefice held by a rector. 17
Ibid
Oxford dictionary, 2012 Oxford University Press, viewed September 2012, http://oxforddictionaries.com/
7
Ibid
8
Department of Planning and Community Development op. cit
9
Ibid
10
Oxford Dictionary op. cit
11
Department of Planning and Community Development op. cit
12
Oxford Dictionary op. cit
13
Department of Planning and Community Development op. cit
14
Ibid
15
Oxford Dictionary op. cit
16
Ibid
17
Ibid
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6
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
Religious hall - Land used for purposes associated with religious activities and not providing
any commercial opportunities.

Religious study centre - Land used for the training of people associated with religious
activities such as seminaries, novitiates’.

Synagogue – the building where a Jewish assembly or congregation meets for religious
observance and instruction.18

Temple – a place of Christian public worship, especially a Protestant church in France. 19

Vestry – a room or building attached to a church, used as an office and for changing into
ceremonial vestments.20
Ibid
Ibid
20
Ibid
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19
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Additional Victorian legislation and cases applicable to
non-rateable leviable properties
The following Acts are relevant to the valuing of non-rateable leviable land in Victoria:
 The Fire Services Property Levy Act 2012
 Valuation of Land Act 1960
 Local Government Act 1989
 Heritage Act 1995.
Valuation of Land Act heritage provisions
Many properties across the state are listed on the Victorian Heritage Register (VHR) because of
their cultural heritage significance. The listing may not only affect the main building but also
include organs, objects, trees, special works or ancillary buildings on the site.
The significance of some buildings on the VHR may be for their previous uses, such as former
municipal offices. Even though the use may have changed, the heritage significance is still
relevant and needs to be taken into consideration.
The Valuation of Land Act contains provisions relating to heritage registered land that the valuer
must consider when valuing properties registered in whole or in part on the VHR.
Valuation of Land Act 1960 – Section 2(8)
Despite anything in this Act or the Local Government Act 1989, calculation of the capital
improved value, net annual value and site value of any rateable land that is a registered place
within the meaning of the Heritage Act 1995, or a building included in the Heritage Register
established under that Act must be made on the following basis:
(a) as to the part actually occupied by the building included in the Heritage Register
established under the Heritage Act 1995:
(i) that the land may be used only for the purpose for which it was used at the date of
valuation; and
(ii) that all improvements on that land as at the date of valuation may be continued
and maintained in order that the use of the land referred to in subparagraph (i)
may be continued; and
(iii) that no improvements, other than those referred to in subparagraph (ii), may be
made to or on that land; or
(b) as to any part (not actually occupied by the building included in the Heritage Register and
not land that is included in the Heritage Register), that the building included in the
Heritage Register cannot be removed or demolished and that any land referred to in
paragraph (c) must not be subdivided or developed unless a permit to subdivide or
develop the land has been granted by the Heritage Council; or
(c) as to any land that is included in the Heritage Register established under the Heritage Act
1995, that the land cannot be subdivided or developed; or, if a permit to subdivide or
develop the land has been granted by the Heritage Council, that it can be subdivided or
developed only in accordance with that permit.
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Valuation of Land Act refusal of permit provisions
If a permit for demolition of a building has been refused Section 2(9) of the Valuation of Land Act
applies. This provision requires that the land must be calculated on the basis that a building
cannot be pulled down or removed. The valuer must value the site value, capital improved value
and net annual value on the basis that the building and/or improvements to which the permit
relates are to remain on the land.
Valuation of Land Act 1960 – Section 2(9)
If:
(a) a planning scheme under the Planning and Environment Act 1987 prohibits the pulling
down or removal of a building; or
(b) a planning scheme under the Planning and Environment Act 1987 provides that a permit is
required before a building may be pulled down or removed and:
(i) the responsible authority has refused to grant a permit; or
(ii) the Administrative Appeals Tribunal or the Victorian Civil and
Administrative Tribunal has directed that no permit issueThen despite anything in the Local Government Act 1989 or this Act the capital improved
value, net annual value and site value of any rateable land that includes the building must
be calculated on the basis that the building cannot be pulled down or removed.
Extracts from cases and reference material
Extract from Australian Postal Commission v Melbourne City Council [2005] VSCA 295
Under s.5A the determination of the value of land on the basis of the highest and best use
of land requires that the land be considered with all its attributes, existing and potential,
at the relevant moment for assessment of value. One must consider the potential uses to
which it might be put assuming the restrictions to which it is subject at the time of
valuation.[2] Therefore, putting aside the effect of s.2(8), a valuer of Heritage listed land
would be required to value it on the basis of all potential uses to which the land might be
put under the existing heritage restrictions and consequently would have to take into
account any uses to which the land was not being put but might lawfully be put under
existing restrictions. Under s.2(8), however, one is expressly directed that the valuation of
Heritage listed land must be undertaken on the basis that the land may be used only for
the purpose for which it was used at the date of valuation, and so, according to the plain
and ordinary meaning of the terms of s.2(8), the valuer would not be permitted to take
into account any other use to which the land might be put under existing restrictions.
Furthermore, whereas under s.5A a valuer is directed also to take into account “any
potential use”, which we take to mean any use to which the land might be put in future if
existing restrictions were altered in a way which at present seems conceivable, under
s.2(8) the valuer is expressly directed that the valuation is to be undertaken on a basis
which excludes any use other than the existing use, and therefore, as it seems to us, which
necessarily excludes any potential for change to existing restrictions. 21
21
Australian Postal Commission v Melbourne City Council [2005] VSCA 295, at 17
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Extract from The Law Affecting Valuation of Land in Australia
For properties that have heritage significance (as outlined under capital improved value), in
relation to site value, the following extract provides guidance:
For these reasons, when assessing the site value of land, it is necessary to have regard to
any restriction upon the use and development of the subject land caused by the heritage
listing of the improvements upon it. It is for these reasons also that I agree with the
conclusion of Mullighan J in McEwin v Valuer-General (1993) 60 SASR 241 at 247 that the
restrictions caused by the heritage listing must be considered when determining the site
value.22
Court cases
There are no court cases directly applicable to the categories in this paper.
The following are some of the court cases that assist with regards to heritage considerations,
highest and best use and Special Use/Public Use zoned land:

Challenger Property Asset Management Pty Ltd & Anor v Stonnington City Council & Anor
[2011] VSC 184
VALUATION OF LAND – Meaning of ‛site value’ – Meaning of ‛capital improved value’ and
whether ‛vacant to let’ deduction required – ‛highest and best use’ – Falconer principle –
sales of other properties and their relevance as comparable sales or on other bases –
Valuation of Land Act 1960.
REAL PROPERTY – Meaning of fee simple in possession – ‛Whether lease an encumbrance’.

ISPT Pty Ltd v City of Melbourne and Valuer-General Victoria [2008] VSCA 180
VALUATION OF LAND – Application for leave to appeal decision of Victorian Civil and
Administrative Tribunal – Role of the Tribunal – Whether expert tribunal – Whether
Tribunal pieced together own valuation.
VALUATION OF LAND – Highest and best use – Whether single precise use or combination
of uses.
VALUATION OF LAND – Comparable sales – Improved and unimproved sales – Vacant land
sales – Weight to be given to valuer’s evidence.

Commonwealth Custodial Services Ltd v Valuer General [2007] NSWCA 365
VALUATION – Valuation of Land – Methods of Valuation – Where land subject to heritage
restrictions – Valuation of Land Act 1916 ss 6A, 14G; STATUTES – Interpretation –
Mischief rule.
22
Alan Hyam The Law Affecting Valuation of Land in Australia (Federation Press, 4th Ed 2009) 293
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
Blacktown City Council v Roads and Traffic Authority of NSW [2006] NSWLEC 37 (3
FEBRUARY 2006)
CATCH WORDS: Compulsory Acquisition of Land

Australian Postal Commission v Melbourne City Council [2005] VSCA 295
VALUATION OF LAND - Heritage Register – Valuation of building included in Heritage
Register – Whether building included in Heritage Register to be valued as if devoid of
potential for change of use and improvement - Statutes – Interpretation – Literal
interpretation – Mischief rule – Whether s.2(8) of the Valuation of Land Act 1960 to be
construed literally – Valuation of Land Act 1960, ss.2(8) and 5A; Heritage Act 1995.

New South Wales Golf Club Limited v Valuer General [1993] NSWLEC 202 (3 December
1993)

City of Brighton v Road Construction Authority [1985] VicSC 359
Refers to the valuation of land reserved as parkland. ‛The Authority’s case was that if the
land could not be valued as parkland, the next most appropriate method of valuing it was
upon the basis that it was, after some delay, rezoned to residential and the subdivided
into 12 allotments.’23

Port Macquarie West Bowling Club Ltd v The Minister [1972] 2 NSWLR 63; (1972) LGRA 23

Royal Sydney Golf Club v Federal Commissioner of Taxation [1955] HCA 13
Land Tax - Land - Golfcourse - Golf club - Facilities and amenities - Use by members Unimproved value of land - Valuation - Regard to provisions and effect of County of
Cumberland Planning Scheme - ‛Vacant land’ - ‛Built-up land’ - Restrictions - ‛Land upon &
which there are no buildings’24

Alpine Shire Council v MHSC Transportation Services Pty [2002] VSC 22 (25 February
2002)
VALUATION OF LAND for rating purposes of an operating commercial airport at the alpine
site of Mount Hotham – where four separate valuations were presented to the Court,
differently based and leading to different assessments of the capital improved value of the
improved airport land – what was the correct methodology for valuing the airport?
23
City of Brighton v Road Construction Authority [1985] Supreme Court of Victoria, Unreported Judgments p 32.
24
Royal Sydney Golf Club v Federal Commissioner of Taxation [1955] HCA 13 at 1
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Other relevant material:
The Internet is a valuable resource; the following sites may provide useful information:

Victorian Heritage Register Database
http://vhd.heritage.vic.gov.au/
Note: advanced searches can be done by selecting the Heritage group and then the
Heritage category within a municipality.

National Trust Listing – Victoria http://www.nattrust.com.au/advocacy/heritage_listing

Heritage places and objects technical guides and leaflets http://www.dpcd.vic.gov.au/heritage/heritage-places-and-objects/technical-guides-andleaflets

Valuer General Victoria Jam Factory Practice Note
http://www.dse.vic.gov.au/property-titles-and-maps/valuation-home-page/councilvaluations-homepage

Department of Sustainability and Environment – Guidance Note
Fair Value Asset Valuation Methodologies for Victorian Local Governments
http://www.dpcd.vic.gov.au/__data/assets/pdf_file/0003/38181/070601FairValueAsset.pdf

Private schools directory
www.privateschoolsdirectory.com.au
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 ww.dse.vic.gov.au/property-titles-and-maps/valuation-home-page/council-valuations-homepage l Victoria
Identification of properties
Australian Valuation Property Classification Codes (AVPCC)
The valuer is required to appropriately categorise non-rateable leviable properties within the
municipality.
The following Australian Valuation Property Classification Codes (AVPCC) are applicable to
properties subject to these guidelines:
Religious

Church, Temple, Synagogue, etc. - 740

Religious Hall – 741

Rectory, Manse, Presbytery – 742

Religious Study Centre – 743
Education and Research

School Primary – Public/Private – 721

School/College Secondary/Technical School – Public/Private – 723
o
Unspecified – 723.1
o
Secondary School College – 723.2
o
Private Education Centre – 723.3
o
Public Education Centre – 723.4
o
Technical School – 723.5

Special Needs School – 724

University – Private/Public – 725

Technical and Further Education – 726

Research Institute Public – 727
Community Service and Sporting Clubrooms and Halls

Halls and Service Clubrooms – 750

Community/Neighbourhood Facility – 752
Government Administration

Local Government – 762

Civic Buildings – 763
Local Cultural Heritage Sites, Memorials and Monuments

Library/Archives – 840

Museum/Art Gallery – 841
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Information questionnaire –
specific requirements applicable to non-rateable leviable properties
The following is a guide to the type of information required for non-rateable leviable properties.
It is recommended that the information is requested with a covering letter in the same format as
provided in the general rental questionnaire in General Provisions for Specialist Guidelines, with
the following modifications:
Covering letter
State Government legislation requires Victorian councils to revalue all rateable and non-rateable
leviable properties once every two years.
The relevant date for the next revaluation is 1 January 2014. Council will use the new values for
rating and levy purposes for the 2014-2015 and 2015-2016 financial years
Section 3A of the Valuation of Land Act 1960 requires and provides that:
(a) a valuer may enter at all reasonable hours in the daytime upon any land building or
premises
(b) a valuer may put either verbally or in writing any relevant questions to enable the making
of a true and correct valuation
(c) a valuer may inspect any books or documents and papers for the purpose of such
valuation and without charge take extracts there from
(d) council (and their representatives) must treat the information as confidential
(e) a penalty not exceeding two penalty units per assessment applies for failure to allow such
entry or inspection, refusal or willful omission in answering questions or providing
information or falsifying any information provided
To assist in the carrying out of a true and correct valuation, the attached information
questionnaire is required to be filled in and returned to council by the [xx date].
While it is preferred that documentation is returned in an electronic format, a hard copy is
acceptable.
If you have any questions please do not hesitate to contact council’s valuer [insert details of
valuer].
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Questionnaire
The following sections of the general rental questionnaire are applicable to this paper and should
be incorporated in the request for information:
Section 1 – Occupancy details:
1. Occupancy details
Name of occupier:
Name of premise):
________________________________________________
Use(s) of premise:
Place of Worship
 Place of worship  Hall  School  Religious centre  Residence
 Sporting facilities (if yes please specify________________________)
 Other (if yes please specify
Private School
 School (both primary and secondary)  Primary only  Secondary only
 Hall  Chapel  Indoor recreational facilities  Boarding facilities  Residence/caretaker
 Sporting facilities (if yes please specify________________________)
 Other (if yes please specify
Civic Centre
 Office/Administration  Town Hall  Council Chambers (separate building)
 Council Chambers (within Town Hall/Council Offices)
 Library  Community Building
 Other (if yes please specify
Are any parts of the property occupied by separate tenants?  Yes  No
(If yes, please complete Section 4).
Section 2 – Land Details
Section 3 – Property Details
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4. Lease details (if any)
Is the property (or any parts of it) subject to a lease?  Yes  No (if yes, please provide the following
information)
Lease commencement date:
____/____/_____
Initial term:
________________
_______________ Lease options:
Current rental:
$______________  Per week
 Inclusive GST
 Per calendar month
 Exclusive GST
 Annual
Date last reviewed: ____/____/_____ Frequency of rent review:______________ (e.g. annual, two yearly)
Method of rent review:
Outgoings:
 CPI
 To market
 Fixed _______%
 Other___________
 Owner $___________
 Tenant $___________
5. Additional questions relating to Heritage and other issues
Are any buildings, monuments, trees or other works on the property listed under the Victorian Heritage
Register (VHR)?
 Yes  No
If yes, please complete answer the following questions.
o
o
o
If so, what is listed on the VHR? _________________________________
What is the significance? ______________________________________
What is the Architectural style? _________________________________
Are there any significant fixtures on the property that may also have heritage significance?
(example pipe organ)  Yes  No
If yes, please provide a description and significance of fixture. _________________________________
Documents - The following documents are required.
(Please indicate if they have been attached to this request for information).
a)
Do you have a copy of the assets/depreciation schedule for the property?  Yes  No
If yes, is this attached?  Yes  No
If No, please provide the reason:___________________________________
b)
Do you have information on replacement costs and/or current depreciation costs?  Yes  No
This may be in the form of:
o
o
o
o
an asset schedule or a depreciation schedule
a list of plant and equipment
details on age and economic life
other document or schedule
If yes, is this attached?  Yes  No
If No, please provide the reason:___________________________________
Section 6 – Declaration
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Property inspection –
specific requirements applicable to non-rateable leviable properties
In conjunction with the general procedure in carrying out a property inspection for statutory
purposes, the following procedures are applicable to the categories in this guideline.
1. Investigate documents:







Are any buildings, fixtures, trees, objects or other works on the property listed
under the Heritage Register?
o
If so, what is the heritage register number?
o
What is the heritage status/level of significance?
o
What is the significance?
o
What is the architectural style?
Is the property subject to any heritage or other overlays or restrictions?
If yes, what is the heritage overlay number?
Planning permit – Does the land have an existing permit? What is the permitted
use or alternate uses?
What are the car parking requirements?
Certificate of Title – are there any restrictions to the title? Are there any
Section.173 agreements? Determine impact on site value, if any.
The asset register should be sourced for the following information:
o
An asset/depreciation schedule
o
A list of plant and equipment (this may be referred to in the
asset/depreciation schedule)
o
Details of age and economic life
o
Replacement cost.
2. Site attributes:





Confirm land area
Determine title boundaries and number of parcels
Determine zones and/or planning controls
Does the land have potential for further development?
If there are any trees on the land that are on the VHR, the valuer should sight them
and determine the impact (if any).
3. Inspect property and determine components of the property such as:
a)
Building architecture and functionality:







b)
Architectural significance
Does the office building have any significant features? Does the building have
an original component that is of an older construction type and/or style?
What is the condition, functionality and versatility of the accommodation?
Is/are the building/s obsolete?
Technology systems
Sound/heating/cooling/security/fire systems
Significant fixtures such as piped organ.
Size/capacity:



Place of worship – seating capacity
School capacity
o average class size – junior School
o average class size – senior School
Office facilities – lettable area of office space including meeting rooms and
amenities if exclusively occupied.
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c)
Ancillary buildings:
What other buildings are located on the site, such as:
 School/classrooms
 Town hall/council chambers
 Childcare or pre-school facilities
 Library
 Chapel
 Ancillary rooms such as major room/office, dining room, kitchen facilities,
and amenities.
 Laboratories/science buildings
 Office facilities/accommodation
 Boarding facilities/convent/residence
 Gymnasium, indoor swimming pools, indoor sporting facilities
d)
Other improvements:
 Outdoor sporting facilities, tennis courts, swimming pools etc.
 How many car parks are available on site?
 Other improvements on the site
 Are gardens/fences/gates/paving/monuments of any significance?
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Methodology

Site value
General Provisions for Specialist Guidelines outlines the general principles in determining site
value.
Prior to valuing the land, the valuer needs to determine if Section 2(8) of the Valuation of
Land Act applies, by ascertaining if any part/s of the property are listed on the Victorian
Heritage Register (VHR).
If the property is listed on the VHR then, in accordance with Section 2(8) Valuation of Land
Act, the valuer is to:

disregard or exclude any potential the site may have and value the land for the
purpose for which the site was being used at the date of valuation

assume that the existing building(s) on the site is the only building(s) that the existing
use could be continued on the land

consider the building with all its perceived benefits of a heritage building and all the
perceived burdens such as functionality (the benefits and burden principle should
apply).
If Section 2(8) does not apply (i.e. the property is not listed on the VHR) then the site should
be valued with regard to its highest and best use.
The following are more detailed considerations for site value:
Planning controls
Planning controls include zoning overlays, development plans and controls and
permits. The valuer needs to ascertain the highest and best use of the site, taking
into consideration the permitted use/s and development controls. The current use
may not be the highest and best use.
Rezoning potential
This is relevant in instances where there is a public use zone. The valuer needs to
consider what the likelihood is of rezoning. Development of surrounding properties
may give a guide. A time and cost allowance of the rezoning of the site also needs to
be taken into consideration.
Most civic centres will have a public use zone such as PUZ6, Public Use Zone – Local
Government. Civic centre sites frequently comprise multiple parcels, which may be
subject to different zoning.
Heritage overlays
Heritage overlays may be prevalent for places of worship, private schools and civic
centres, particularly some town halls or council chambers. A heritage overlay, like
any planning control, needs to be taken into consideration when determining the
highest and best use and redevelopment potential of the site. Land affected by a
heritage overlay is best compared with sales affected by similar provisions.
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SV methodology
The primary approach (where section 2(8) of the Valuation of Land Act does not apply) is to
apply a rate per square metre/hectare of site area based on a direct comparison of
comparable vacant land sales.
In ascertaining the highest and best use of the site and applying a rate per metre/hectare to
land area, the valuer needs to consider the existing parcels, parcel configuration, zone of
each parcel and the occupancies of the site.
A secondary approach in the absence of comparable sales may be to undertake a
hypothetical subdivision approach – refer to Specialist Property Guideline for Development
Land.
Site improvements as defined under Section 2 (b) of the Valuation of Land Act are
improvements included in the site value unless those improvements can be shown by the
owner or occupier of the land to have been made by the person, or were made at that
person’s expense within 15 years before the valuation. If these improvements have been
carried out within the 15 years the valuer must ascertain the added value of these works (if
any) and assume they have not been made.
If the property is affected by an overlay (but is not listed on the Victorian Heritage Register),
then the most appropriate sales evidence will be of sites that have the same or very similar
overlays.
1. Zoning is public use or special use
If the property is zoned for public use (PUZ) or special use zone (SUZ) the land is required to
be valued taking account the zoning restrictions and/or any specific purpose for which the
property is zoned. The primary approach where sales are available is direct comparison.
In the absence of sales with similar zoning restrictions, the valuer needs to establish an
underlying land value based on an alternative use and make an appropriate allowance for the
zoning constraints. The land should be valued having regard to its alternative highest and
best use and adopting a discount rate that reflects the zoning restrictions, risk associated
with rezoning and costs in achieving the rezoning.
If the valuer has comparable sales of PUZ/SUZ land and non-PUZ/SUZ land they are able to
analyse the affect of existing zoning from an alternative underlying zone in order to support
the applicable discount (if any).
Example PUZ property:
Subject: Private School
Land: 4 Hectares Public Use Zone
Buildings: 7,500 m2
Assumptions
Underlying Land Value: Residential $1,000/m2
Site Value
Land Area
Area (m2)
40,000
Rate $/m2
$1,000
Less Allowance for
Restriction/s
Discount Rate 30%
SV (rounded)
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Value
$ 40,000,000
$12,000,000
$28,000,000
Page 16 of 30
Victorian Statutory Revaluation
2. Land on which is situated a place that is on Victorian Heritage Register
In assessing the site value when Section 2(8) of the VL Act 1960 applies, the appropriate
approach is to calculate the capital improved value and then deduct the added value of the
improvements to derive the site value. The added value of the improvements is determined
via sales analysis of in use improved sales.
Example heritage property:
Subject: Church on Victorian Heritage Register
Land: 1,000m2
Buildings: 500m2
Assumptions
Added Value $500/m2
Site Value
CIV Direct
Comparison
Less Added Value
of Improvements
Area (m2)
1,000
Rate $/m2
$800
Value
$800,000
500
$500
$250,000
SV (rounded)
$550,000
Capital improved value
In accordance with the Valuation of Land Act definition of Capital Improved Value (CIV) the
estate in fee simple of the subject land must be assessed at its market value in the state in
which it existed at the return date. The value is to be determined with regard to Section 5A of
the Valuation of Land Act.
Refer also to General Provisions for Specialist Guidelines and Valuer-General Victoria Jam
Factory Decision Practice Note – October 2011
When assessing CIV the land must be valued in accordance with one of the following criteria:
1. Land not included on the Victorian Heritage Register
The market value is based on the highest and best use determined from sales of similar
zoned land with similar development potential.
It is open for the valuer to consider the existing use as well as any other alternative uses that
the valuer considers maximises the potential of the site and is permitted under the existing
planning controls.
The buildings on the site may or may not provide added value to the land. This will be
established after determining the land value. If the site has no development potential, then
the buildings may have alternative uses permitted under the planning regulations that
provide a higher use of the property.
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 17 of 30
Victorian Statutory Revaluation
2. Land included on the Victorian Heritage Register
For properties that are listed on the Victorian Heritage Register, Section 2(8) of the Valuation
of Land Act provides guidance on the basis upon which CIV is calculated.
The main considerations are:

the existing use as at the date of valuation continues

improvements are maintained in the same state to enable the existing use

no other improvement can be made.
These provisions apply only to the building or part of the building that is the subject of the
registration. The valuer should consider where the heritage significance applies to a fixture.
The Valuation of Land Act provisions still apply to the affected part and the valuer has to
determine the effect on the land. In the case of objects, these are considered to be a chattel
and therefore cannot be reflected in the CIV.
Highest and best use
When determining value of land, the following Section 5A provisions of the Valuation of Land
Act should be taken into account:
 Section 5A (3)(a) – the use to which such land is being put at the relevant time, the highest
and best use to which the land might reasonably be expected to be put at the relevant
time and to any potential use;
 Section 5A (3)(f) – the actual and potential capacity of the land to yield a monetary return.
It is not necessary to identify a precise highest and best use. Rather, it is open to the valuer to
identify the highest and best use in terms of the various types of allowable uses.
Existing use
Where the existing use is considered to be the highest and best use, then the following
considerations are relevant:
1.
Architecture
o
Architectural style
o
Period
o
Significant features
o
Architectural obsolescence
2.
Functionality
o
Funcionality/obsolescence
o
Quality/condition
o
Fit out
o
Services – heating/cooling/audio/security/fire systems
o
Halls/libraries/chambers/theatres
o
Amenities (bathrooms, change rooms, lunch rooms)
o
Administration support/meeting rooms
3.
Size/capacity of building(s)
o GLA/NLA
o Seating capacity
o Classroom size
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 18 of 30
Victorian Statutory Revaluation
4.
Associated structure and facilities such as:
o
Indoor sporting facilities (swimming pools, gymnasium)
o
Outdoor sporting facilities (tennis courts, sports ovals, athletics
facilities)
o
Boarding facilities
o
Chapel/place of worship
o
Convent/ caretaker residence
o
Assembly hall/auditorium
o
Theatre/music/libraries
o
Art facilities
5.
Car parking on site
6.
Site design and topography
7.
Development Potential
8.
Market Evidence
 Actual occupation
 Future occupation
 Actual rentals
 Market rentals
Alternative use
For land where an alternative use is considered to be the highest and best use, then the
following factors need to be taken into consideration.



Compliance with planning provisions
Effect of modifications and changes
Occupation at market rates.
CIV methodology
The four methodologies for valuing non-rateable leviable properties in this guideline paper
are:
1.
2.
3.
4.
Direct comparison
Summation
Capitalisation
Contractors method (Depreciation replacement cost).
Comparison factors applicable to all four methodologies are:








Heritage significance
Location
Zoning, overlays and other planning controls
Land area, shape and topography
Architectural style
Building age, size, capacity, functionality
Overall building facilities and amenities.
Site amenities, car parking, security
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 19 of 30
Victorian Statutory Revaluation
1. Direct comparison
This methodology is the recommended approach where sales of comparable properties are
available. An analysis per square metre of an ‘all in’ land and building rate can be derived
and applied to the subject land.
Comparison is performed on a $/m2 of site area or a $/m2 of building area.
The following is an example of the direct comparison approach applied as an ‘all in’ value to
the site area.
Sample property:
Subject: Private school
Land: 4.0 Hectares Public Use Zone
Buildings: 7,500 m2
Assumptions
Direct comparison ‘all in’ sales analysis $1000 - $1500/m2 of site area
Capital Improved Value
Land &
Improvements
CIV (rounded)
Area (m2)
40,000
Rate $/m2
$1,250
Value
$ 50,000,000
$ 50,000,000
Alternatively the following is an example of the direct comparison approach applied as an ‘all
in’ value to the building area.
Assumptions
Direct comparison ‘all in’ sales analysis $6,500 - $7,000/m2 of building area.
Land &
Improvements
CIV (rounded)
Area (m2)
7,500
Rate $/m2
$6,650
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Value
$49,875,000
$ 50,000,000
Page 20 of 30
Victorian Statutory Revaluation
2. Summation
This methodology relies upon the assessed site value plus the added value of improvements
gained from the analysis of comparable sales.
The following is an example of the summation approach applied to the previous sample
property.
Area (m2)
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Site value
Junior school
Senior school
Hall
Administration
building
Science laboratory
Art building
Chapel (Heritage
Listed)
Indoor sports
centre
Outdoor recreation
facilities
Landscaping
1000
2000
1000
$2,000
$2,000
$1,500
Value
$28,000,000
$2,000,000
$4,000,000
$1,500,000
500
600
600
$4,000
$5,000
$2,000
$2,000,000
$3,000,000
$1,200,000
300
$2,000
$600,000
1500
$3,500
$5,250,000
Equals
Total CIV
(rounded)
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Rate $/m2
$
$
2,000,000
750,000
$ 50,300,000
$ 50,000,000
Page 21 of 30
Victorian Statutory Revaluation
3. Capitalisation approach
This method is adopted where comparable sales and rental evidence is available in order to
derive market rent and market yield or capitalisation rate. The net rental on a fully let basis
is adopted for the subject land and then capitalised at an appropriate market yield.
The following is an example of the capitalisation approach.
Sample property:
Subject: Civic centre and public car park
Land: 2.0 Hectares of Residential 1 zoned land
Buildings: 7,000m2
Parcel
Civic centre
Lot 1 PS12345
Land area
(m2)
15,000
Car park
Lot 2 PS12345
5,000
Total SV (rounded)
Municipal offices
Town hall, chambers
and library
Rate $/m2
$1500
Site value
$800
$ 12,000,000
$
20,000
7,500,000
$19,500,000
Net Lettable
Area (m2)
5,000
Rental
($/m2)
$400
Annual
rental
$2,000,000
Cap
rate
8.00%
$ 25,000,000
2,000
$300
$ 600,000
8.00%
$ 7,500,000
Plus car park
Total CIV (rounded)
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
CIV
$7,500,000
$40,000,000
Page 22 of 30
Victorian Statutory Revaluation
4. Contractors method
This method of valuation is used in the case of land rarely let with limited, if any, sales
evidence. By their nature they do not lend themselves to valuation by comparison with other
classes where sales and rental evidence does exist. In these instances the contractors method
may be appropriate.
Contractors method is the replacement cost less depreciation (age) and
underutilisation/obsolescence factor.
Contractors method = cost – (depreciation + underutilisation/obsolescence)
The valuation approach comprises three elements:



Building cost and other improvements
Depreciation and obsolescence
Land value.
Building cost
Valuers should have regard to construction materials, architectural features and finishes.
Private schools, places of worship and civic buildings often have special features and
materials, that need to be accounted for in the cost. Examples are provided below.
Roofs
Material, together with any spire, bellcote, associated embellishments, gargoyles and other
decorative features.
Walls, ceilings, floors
Materials, extra widths, eaves, gables, pillars, arches, parapets, pinnacles, timber
features/panelling, ceiling/wall paintings.
Window and doors
Materials, surrounds, mullions and tracery. plain, coloured, stained, painted or engraved
glass.
Internal
Classrooms, cupboards, benches, office/meeting room fit outs, kitchens/cafeteria’s, wet
areas/bathrooms, dormitories, laboratories.
Finishes
All flooring materials, all levels and galleries, internal linings, ceilings and vaulting, including
any decorative features.
Services
Fixed heating, cooling, lighting, security/alarms, fire services
Electrical
Data/audio equipment, fixed electronic screens/projectors, terracing of fixed seating,
additional sound proofing for noise control.
Other improvements
Valuers should have regard to other improvements on the land including gates, fencing,
boundary walls, landscaping, driveways, carparking and ancillary improvements such as
stores and sheds.
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 23 of 30
Victorian Statutory Revaluation
Depreciation and obsolescence
The appropriate rate of depreciation adopted should reflect physical and functional
obsolescence.
Physical obsolescence
Considered to be an allowance for the age of the improvements and economic life.
Functional obsolescence
Considered to be an allowance for utility, condition, quality, services and inferior access and
finish.
Land value
Land value should be based on sales evidence and the appropriate rate applied to
the total site area. See Site Value methodology.
In carrying out this approach, the following information is useful:

Owner/ratepayer depreciation schedule and asset register.

Obsolescence/book values

Estimates for insurance replacement cost

Building surveys

Engineering reports

Quality of improvements, which refers to issues such as functionality, age, utilisation,
economic life.

Cost guides
o Rawlinsons/Cordells
o Costings submitted for building approvals
o Information from other valuers or councils
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 24 of 30
Victorian Statutory Revaluation
The following is an example of the contractors approach applied to the sample school property adopting straight line depreciation.
Area
(m2)
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Plus
Equals
Site value
Junior school
Senior school
Hall
Administration
building
Science laboratory
Art building
Convent (Heritage
Listed)
Indoor sports
centre
Outdoor recreation
facilities
Landscaping
Replacement
cost
(rate/m2)
Depreciation
(%)
Underutilisation
/obsolescence
(%)
Total
depreciation
and
obsolescence
Adjusted
depreciated
rate $/m2
Value
1000
2000
1000
$4,000
$4,000
$3,000
30%
25%
30%
10%
15%
5%
40%
40%
35%
$2,400
$2,400
$1,950
28,000,000
$2,400,000
$4,800,000
$1,950,000
500
600
600
$6,000
$8,000
$3,000
30%
10%
40%
15%
10%
25%
45%
20%
65%
$3,300
$6,400
$1,050
$1,650,000
$3,840,000
$630,000
300
$10,000
35%
35%
70%
$3,000
$900,000
1500
$4,000
10%
0%
10%
$3,600
$5,400,000
$
$
$
Capital Improved
Value (CIV)
CIV (rounded)
$ 50,320,000
$ 50,000,000
Another example of contractors method is provided in Guidelines on Valuation Methodology for Plant and Equipment.
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
1,500,000
750,000
Page 25 of 30
Victorian Statutory Revaluation
CIV apportionment
If the site value or capital improved value for individual occupancies is required to be
apportioned then this should be undertaken in accordance with section 2(3) of the
Valuation of Land Act.
AVPCC codes need to be applied to each separate occupancy.
Surplus land
Surplus undeveloped land not required for the existing use is considered a separate
occupancy and can be valued as a separate assessment, even when a separate title does not
exist. Each parcel must be assessed assuming unencumbered freehold and not part of a
larger property.
The valuer is required to determine what is surplus land by having regard to whether:
 the land is not required to be occupied under the existing use and/or
 is set aside for future redevelopment.
Estimated annual value and Net annual value
In the valuation of a non-rateable leviable property, the calculation of the estimated annual
value and net annual value is required to be determined in accordance with the definitions
in Section (2)(1) of the Valuation of Land Act.
Refer also to General Provisions for Specialist Guidelines.
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 26 of 30
Victorian Statutory Revaluation
Industry information
Victorian Heritage Register
Heritage places can include buildings, trees, parks and gardens, streetscapes, archaeological sites,
shipwrecks and structures such as bandstands.
A heritage object can include furniture, shipwreck relics, archaeological artifacts, equipment,
transport vehicles, and articles of everyday use that contribute to an understanding of Victoria’s
history.25
What does inclusion in the Victorian Heritage Register mean?
Places or objects registered by the Heritage Council of Victoria are of special cultural heritage
significance to the State of Victoria and are legally protected to help conserve them for
appreciation by future generations.
Registration by the Heritage Council of Victoria does not prevent places or objects from being
sold, altered or employed for different uses. 26
What are the criteria for registration?
For a place or object to be included in the Victorian Heritage Register it must meet at least one of
the Heritage Council of Victoria criteria for assessing cultural heritage significance27.
Heritage Council of Victoria criteria
For a place or object to be included in the Victorian Heritage Register it must meet at least one of
the criteria.


Criterion A – importance to the course or pattern of Victoria’s cultural history.

Criterion C – potential to yield information that will contribute to an understanding of
Victoria’s cultural history.

Criterion D – importance in demonstrating the principal characteristics of a class of
cultural places or objects.


Criterion E – importance in exhibiting particular aesthetic characteristics.

Criterion G – strong or special association with a particular community or cultural group
for social, cultural or spiritual reasons. This includes the significance of a place to
Indigenous peoples as part of their continuing and developing cultural traditions.

Criterion H – special association with the life or works of a person, or group of persons, of
importance in Victoria’s history. 28
Criterion B – possession of uncommon, rare or endangered aspects of Victoria’s cultural
history.
Criterion F – importance in demonstrating a high degree of creative or technical
achievement at a particular period.
25
Department of Planning and Community Development 2012, Department of Planning and Community Development,
Victoria, viewed 28 September 2012, www.dpcd.vic.gov.au/heritage/victorian-heritage-register
26
Department of Planning and Community Development 2012, Department of Planning and Community Development,
Victoria, viewed 28 September 2012, www.dpcd.vic.gov.au/heritage/victorian-heritage-register/registration/how-tonominate-to-the-victorian-heritage-register
27
Ibid
28
Ibid
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 27 of 30
Victorian Statutory Revaluation
Victorian Heritage Act 1995
The Victorian Heritage Act 1995 is administered by Heritage Victoria and is the Victorian
Government's key piece of cultural heritage legislation.
The Victorian Heritage Act identifies and protects heritage places and objects that are of
significance to the State of Victoria including:
 historic archaeological sites and artefacts
 historic buildings, structures and precincts
 gardens, trees and cemeteries
 cultural landscapes
 shipwrecks and relics
 significant objects.
The Heritage Act establishes the Victorian Heritage Register, the Heritage Inventory and the
Heritage Council of Victoria.29
Burra Charter
The Burra Charter provides guidance for the conservation and management of places of cultural
significance (cultural heritage places), and is based on the knowledge and experience of
Australia’s International Council on Monuments and Sites (Australia ICOMOS) members.
Conservation is an integral part of the management of places of cultural significance and is an
ongoing responsibility.30
Who is the charter for?
The charter sets a standard of practice for those who provide advice, make decisions about, or
undertake works to places of cultural significance, including owners, managers and custodians. 31
29
Department of Planning and Community Development 2012, Department of Planning and Community Development,
Victoria, viewed 28 September 2012, http://www.dpcd.vic.gov.au/heritage/about/heritage-policy-and-legislation
30
Ibid
31
Ibid
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 28 of 30
Victorian Statutory Revaluation
The following are extracts from the Heritage Act 1995
Definitions – Section 3

cultural heritage means places and objects of cultural heritage significance;

cultural heritage significance means aesthetic, archaeological, architectural, cultural,
historical, scientific or social significance;

heritage object means an object included in the Heritage Register as a heritage object;

heritage place means a place included in the Heritage Register as a heritage place;

place includes:
o
o
o
o
o
o
o
o

a building
a garden
a tree
the remains of a ship or part of a ship
an archaeological site
a precinct
a site
land associated with anything specified in paragraphs (a) to (g).
protected zone means an area included in the Heritage Register as a protected zone;
Categories of registration – Section 20
20. Categories of registration
(1) A place or object must be recorded in the Heritage Register in one or more
of the following categories(a)
(b)
(ba)
(c)
(d)
(e)
(f)
(g)
heritage places;
heritage objects;
places included in the World Heritage List;
archaeological places;
archaeological relics;
historic shipwrecks;
historic shipwreck relics;
protected zones.
(2) The Executive Director must specify the category or categories of the
Heritage Register in which a place or object is to be registered.
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
Page 29 of 30
Victorian Statutory Revaluation
The following definitions are from the Heritage Overlay Guidelines 32
Heritage Overlay
A Heritage Overlay (HO) is applied to a Heritage Place to conserve its cultural heritage values. The
Heritage Overlay provisions are found at Clause 43.01 of planning schemes. The Guidelines
assume that a Statement of Significance for a Heritage Place (or another assessment such as a
Heritage Study) has defined or identified the relevant Contributory Elements.
Heritage Place
Under the Victoria Planning Provisions, (refer to VPP Practice Note – Applying the Heritage
Overlay) a Heritage Place can be a: building (e.g. house, shop, factory etc.), structure (e.g.
memorial, bridge or tram poles), features (e.g. mine shafts and mullock heaps, street gutters and
paving), private garden or public park, single tree or group of trees such as an avenue, group of
buildings or sites, landscape, geological formation, fossil site, or habitat or other place of natural
or Cultural Heritage Significance and its associated land.
In planning scheme terms, a Heritage Overlay includes the land associated with the Heritage
Place. The term ‘Heritage Place’ does not include movable objects, such as machinery within a
factory or furniture within a house.
Area HO
An Area HO is a collection of sites that contribute to the Cultural Heritage Significance of an area.
The Statement of Significance or other heritage assessment should identify its Contributory
Elements.
Cultural Heritage Significance
Cultural Heritage Significance means aesthetic, historic, scientific, spiritual or social value or
other special value for the present community and future generations of Australians.
Heritage Area
A Heritage Area is all the land covered by an Area HO. It may sometimes be called a precinct.
Individual HO
An Individual HO is a single Heritage Place that has Cultural Heritage Significance independent of
its context. Some places covered by an Individual HO also make a contribution to the significance
of an Area HO. There should be a Statement of Significance for every Individual HO.
Maintenance
Maintenance is the continuous protective care of the Building Fabric and Setting of a Heritage
Place, and is to be distinguished from repair. Repair involves Restoration or Reconstruction.
Reconstruction
Reconstruction means returning the Fabric of a place to a known earlier state including the
introduction of new material into the Fabric.
Restoration
Restoration means returning the existing Fabric of a place to a known earlier state by removing
accretions or by reassembling existing components without the introduction of new material.
(Burra Charter).
Statement of Significance
A guide to understanding the Cultural Heritage Significance of a place. These are often divided
into three parts: what, how and why.
32
Department of Planning and Community Development 2012, Department of Planning and Community Development,
Victoria, viewed 28 September 2012, http://www.dpcd.vic.gov.au/heritage/Forms-and-Guidelines/heritage-overlayguidelines ‘Glossary of Terms’
Guidelines on Valuation Methodology for Non-rateable Leviable Properties
November 2012 – Version 3
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