SA Property Council continues fight against controversial statewide property revaluation program

The SA Property Council’s pre-State Budget submission will continue its fight against a controversial statewide property revaluation program.

Property Council SA executive director Daniel Gannon. Picture: Stephen Laffer

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Reforming the state’s “broken” land tax regime will form the centrepiece of the Property Council’s pre-State Budget submission, as it continues its fight against a controversial statewide property revaluation program.

To support its campaign, the industry group has released modelling by Deloitte Access Economics, which suggests the State Government could generate up to $75 million in additional land tax revenue each year as a result of the program.

That figure assumes an average 10 per cent increase in property values will result from the project, with the value of premium commercial holdings rising at a faster rate than low-end residential sites.

Property Council SA executive director Daniel Gannon is calling on the State Government to lower land tax rates to offset the impact of higher property values resulting from the revaluation program.

“A 10 per cent increase scenario risks the viability of the entire property industry — South Australia’s biggest private sector employer — let alone a situation where valuations increase by 20, 30 or even 40 per cent,” he said.

“While the commercial sector will take a significant tax hit, mum and dad investors are also at risk if land tax rates aren’t reduced and their valuations rise.

“We acknowledge that valuations might be soft, but land tax rates are nationally anti-competitive and act as a cash cow for government.”

The five-year revaluation program was introduced by former valuer-general Delfina Lanzilli to improve the accuracy of property valuations through more rigorous valuation techniques.

Site and capital values are both being assessed as part of the project, used to calculate council rates, water bills, land tax and other levies.

However, land tax bills are expected to be hit hardest as they are calculated using a fixed rate rather than a variable rate set by individual authorities.

Last year’s State Budget predicted that site values would increase by around 3 to 5 per cent each year over the forward estimates period, including the impact of the revaluation program, which was expected to increase land tax revenue by around $19 million by 2021-22.

However, early results from the revaluation program suggest the increases will be higher, with site values in the completed Unley, Walkerville and Adelaide Plains council areas rising by an average 5.3 to 8.2 per cent.

Those valuations will be incorporated into upcoming council rates and land tax notices, while revaluations in a number of other metropolitan and regional council areas will be adopted the following year.

Treasurer Rob Lucas said the State Government had already legislated reductions to land tax, and further relief was unlikely in the short term.

“If properties have not been accurately valued in the past that means people haven’t been paying the appropriate level of land lax,” he said.

“If we’re losing $517 million because of GST it’s going to make it difficult for further relief.

“Over the long term if budget circumstances permit we’d like to see a more equitable regime compared with the other states.”

From July 2020, the land tax free threshold will increase from $369,000 to $450,000, and the tax rate for investors with property holdings valued between $1.2 million and $5 million will fall from 3.7 to 2.9 per cent. The State Budget will be handed down on June 18.