As farm values rise, will rates increase?

Recent data from Rural Bank’s 2017 Farmland Values Report shows of the 9100-plus rural properties sold in Australia last year, median price growth was slightly down on 2016, but still on the higher side of the long-term average.

Median farmland values in Victoria saw a big year-on-year increase, up 9.5 per cent, recording 1827 sales worth $1.2 billion.

Municipal Association of Victoria president Mary Lalios said while councils would not increase the total collection of rates based on rising land values but a farmer’s increasing land value may impact the “slice of the rate-paying pie” they had to pay.

“Property values going up doesn’t mean rates go up,” Ms Lalios said.

“But the value of your property is used as a determiner of the slice of the pie that you pay.”

She said rates were determined based on what infrastructure and services a council needs to deliver.

“There are 79 councils in Victoria, and they will all make individual decisions in regards to their budgets, taking into consideration the capacity of residents to pay,” she said.

She said some councils had consultation processes with people from their municipality to determine the feasibility of land rates, and other budgetary decisions.

Yarriambiack mayor Graeme Massey said properties were valued in the region every two years, which determines their rate prices.

“There’s a formula we use to calculate this, just because a neighbouring property might have sold for a particular amount, doesn’t mean we assume your property is worth the same amount,” Mr Massey said.

He said if landowners were unsure of how their valuation had been calculated, they can contact the council, who would make justifications.

“Every landowner’s got the right to come back to council and say they disagree with the valuation, and we will investigate and explain to them why we think they should be paying a particular amount,” he said.

The rate cap sits at 2.5 per cent, so councils can not increase rates by higher than that amount year-on-year.

Mr Massey said the amount required from land rates would be determined based on infrastructure plans, in particular plans to fix roads.

He said it was something that had been on the agenda for some time now. He said the council was currently working on its budget, due to be released in June.