The move that could cost landlords millions

Some landlords in southeast Queensland may have to fork out millions of dollars in extra rates and taxes because of a decision made by the Valuer-General.

Southeast Queensland commercial property owners face being slugged millions of dollars in extra rates and taxes because the Valuer-General has elected not to revalue assets this year citing COVID-19 as a “major consideration”, according to a leading valuer.

Savills Australia national head of advisory valuation Neil Murphy slammed the decision and said he expected the decision by Queensland’s new valuer-general Wally Kearnan to impact on the state’s competitiveness.

Just before Christmas the Valuer-General announced that residential and commercial landowners in 25 rural local government areas — largely unaffected by COVID-19 — will receive new land valuations in March.

Those properties in local government areas that miss out will remain on their previous valuations, such as the Brisbane, Gold Coast, Ipswich, Moreton, Logan, Sunshine Coast and other major council areas, which have been most affected by the pandemic.

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At the time the Valuer-General said the decision followed consultation with councils, local and industry stakeholder groups, consideration of property market survey analysis, and the year in which the areas were last revalued. He said the impact of the COVID-19 pandemic was also a major consideration.

However, Mr Murphy said that instead of using COVID-19 as an excuse not to revalue properties because of a drop sales volumes, any actual sales and the pandemic’s impact on those sales should be taken into account.

“It was only two months ago we were having meetings with the old Valuer-General Neil Bray on what the reductions would look like regarding COVID-19 impacts to the various sectors.“

The Brisbane CBD.

Mr Murphy said most of the impact of the valuation decision will be felt mostly in the commercial property sector.

“With REIT’s (real estate investment trusts) valuing every three months at least during COVID how can the Valuer-General not value for two years,” he said.

“It’s basically revenue protection. If you don’t value no one can object or appeal and everyone will be paying higher council rates and Land Tax.

“It will make us less competitive than the southern states which are reducing properties in value but in Queensland they are not giving owners the opportunity to be more competitive which would see more development.”

A Department of Resources spokesman said the market will continue to be monitored and a decision will be made on the 2022 program in the last quarter of 2021.

The Central Village project in Fortitude Valley.

Melbourne-based developer Pellicano Group recently paid $8m plus GST for a 4959sq m development site at 332 Water Street, Fortitude Valley, that was part of Metro Property Group’s Central Village development,

Mr Murphy said the site was originally valued at $16m and after objections by Savills it was reduced to $11m.

“They would not come down to $8m because of COVID so that will cost the owner an extra $105,000 in one year alone,” he said.

M Murphy said the Water Street sale should in the future consideration when looking at valuations on similar properties in the CBD and fringe whose highest and best use is residential unit development.

“The Valuer-General should not be making decision because of lack of sales because of COVID but be based on actual sales,” he said.

Mr Murphy said last year owners of 40 properties in the CBD went to the Land and Environment Court to appeal against what they thought were excessive valuations.

Three properties won a reduction of more than 18 per cent while negotiations continued on the other assets.