Land Valuation Described At Field Day

Press, Volume CI, Issue 29798, 14 April 1962, Page 6

Land Valuation Described At Field Day

An interesting explanation of the valuation of land was given to members of the Banks Peninsula branch of Federated Farmers at Le Bons Bay last week by Mr W. G. Hadley, officer-in-charge of the rural field staff of the Valuation Department in the South Island. Mr Hadley is responsible for correlating land values between county and county and province and province. Valuers of the department were bound by the Valuation of Land Act which, together with case law of court rulings which had defined some sections, laid down how values were to be arrived at, he said.

In defining the different bases of valuation, Mr Hadley said that capital value was “what the property would realise if offered for sale.” Unimproved value was “what the property would realise if offered for sale in its natural state.” For example, Banks Peninsula was originally in standing bush. Improvements were “any work, labour, or capital used for the benefit of the land” and would include even water supplies piped from another property. However, the value of improvements was not the cost of improvements, he said.

The law set down that the first figure to be arrived at was the unimproved value of the land. On the plains, which were formerly in tussock, it was quite easy, but for Banks Peninsula, the problem of the

bush was different. Obviously the full value of the millable timber in the bush could not be taken into account and the common-sense approach was to envisage the land in the milled-over state. Clearing of gorse, however, was not an improvement but was the restoration of the unimproved value. This was to be. fair to the man who had kept his place clean, Mr Hadley said. Case law was that the best test of the value of a property were prices comparable parcels of land had realised. At present there were practically no sales but the law said it was not necessary to have sales. It had to be envisaged what the property would realise if there were buyers.

A forced sale was not regarded as an indication of value under the act—there had to be a reasonable balance between a vendor who was willing to sell but was not over-keen and a willing but not over-keen buyer. Mr Hadley said that every sale in the South Island was recorded and the moment a weakening is noticed, “down our valuations come like greased lightning.” At present, prices being paid for land were still exceeding the department’s figures but the number of sales had decreased. There had been fewer “silly” sales —those in which the prices were far too high. “I’ve thought over the last

25 years prices paid by farmers have been too high,” he said. “Farmers should note the warnings of Lincoln College and the Department of Agriculture. . . .

“But farmers set the values themselves through the prices they paid for land,” Mr Hadley said. Productive valuation was excellent in theory but almost impossible to carry out, although it did have certain advantages in determining an economic unit and the level of management, he said.

Mr Hadley said that county revaluations were made every five years for rating, but these did not stand for death duties or gift duty, for which another valuation could be made

Answering a question on “silly” sales, Mr Hadley said that in the case of a farmer with an uneconomic unit paying a high price for a small block of land adjacent to his own to make his property of economic size, the department would not regard this a true indication of value and would scale the values down because of the special circumstances.

To another questioner who asked whether valuations were increased at counties’ requests so that the counties could obtain more rates to buy expensive machinery instead of borrowing, Mr Hadley said that this was not so. The department followed the act and “no Government, Labour or National, has ever given any direction as to how to value, and certainly no county,” he said.