Change to rating system open for community feedback

Published on 29 November 2023

The City of Hobart is undertaking a thorough review of its Rating and Valuation Strategy, aiming to ensure the City has a rating system that is fair, supports ratepayers capacity to pay, is simple, efficient and sustainable for the future.

A Rating and Valuation Strategy is a fundamental part of the city's financial planning, determining how rates are collected from properties in the municipal area and how the financial burden is distributed among various property types, such as residential and commercial properties.

At the October Hobart City Council meeting, council endorsed a change from Assessed Annual Value (AAV) to Capital Value (CV) as the preferred property valuation basis for the strategy.

Capital Value aligns strongly with the principles of taxation, ensuring a fair and equitable approach while also being the most straightforward for residents to understand.

Hobart Lord Mayor Anna Reynolds stressed the importance of this shift.

"Our comprehensive review found that Capital Value stands out as the most suitable basis for our Rating and Valuation Strategy,” Cr Reynolds said.

“It is not only easy to understand, but also equitable, particularly concerning the capacity to pay.

“Moreover, Capital Value exhibits the least volatility in a property market where property values are growing at different rates compared to rental values."

Using Capital Value as the foundation for rates enables the City to adopt a more nuanced approach through differential rating.

City of Hobart Manager Rates, Procurement and Risk Lara MacDonell said this approach can better reflect the capacity to pay for property owners and provides the City with the flexibility to levy rates based on specific criteria.

"Moving to Capital Value represents a significant step toward improving our Rating and Valuation Strategy,” Ms MacDonell said.

“It aligns with our commitment to fairness and transparency in financial matters.

"This change allows us to strike a balance between ensuring the financial sustainability of our city and the well-being of our residents."

While the Council has endorsed the change of systems, how it is implemented is now open for community feedback.

Hobart has 25,088 properties and seven different land uses: commercial, industrial, primary production (farming), public enterprise, residential, sport & recreation and vacant land.

A range of options for how the Capital Value system is implemented are now available for community consultation and review that looks at municipal charges and differential rates across commercial, residential, industrial etc.

The City of Hobart has not identified any option as the preferred model and none of the options proposed will have any impact on the total amount of rates and charges raised by the City.

The City is also open to other options and encourages the community to put forward their own ideas for a fair rating system.

“Public feedback is essential in shaping the future of the Rating and Valuation Strategy, ensuring that it serves the best interests of the residents while sustaining the city's fiscal stability,” Ms MacDonell said.

Community feedback is open from now until 2 February 2024.

The full list of options can be found here and community drop-in sessions will be available from November through to February for further discussions and to provide answers.