Proposed changes to Section 3 of the Valuation of Land Act 1944

Words removed are struck through, and inserted words are in red. 

(1) For the purposes of this Act—

unimproved value of land means—

(a) in relation to unimproved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require negotiated as a bona fide sale; and

b) in relation to improved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist. negotiated as a bona fide sale, assuming the improvements did not exist.

 

(2) However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act.

(2) However, the unimproved value of improved land can not be less than the sum that would be obtained by deducting the value of improvements from the improved value on the date of valuation.

(2A) The assumption mentioned in subsection (1), definition unimproved value, paragraph (b) is limited to the notional removal of the improvements only as at the time of valuation.

(2A) The assumption mentioned in subsection (1)(b) is limited to the instant in time when the valuation is to be made on the date of valuation.

(2B) For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with—

(a) a local planning instrument; or

(b) a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land.

(c) the making or use of an improvement to land.

(2C) Nothing in subsection (1) or (2) (b) requires an assumption, in relation to improved land, that the improvements have never been made.

 (3) In addition, the restrictions and limitations in any deed of grant or certificate of title in respect of any racecourse shall be disregarded in ascertaining the unimproved value of the land of the racecourse concerned.

(4) Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that—

(a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and

(b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used; but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made.

(c) there is no greater risk than that which applied to the actual use of the land in its actual condition, on the date of valuation, in realising the use of the land, or continuing the use of the land, for any purpose for which it was being used on the date of valuation;

(5) To remove any doubt it is declared that-

(a) the benefit of a lease, agreement for lease or any other instrument of any type relating to land, or improvements on land that enhances the value of the land, as unimproved or improved must be included in its unimproved value; and

(b) the following apply for assessing the unimproved value of land—

(i) the bond rate must be adopted in analysing—

(A) the added value of improvements on the land including any allowance to be made under this section or section 5; and

(B) the added value of improvements involved in any comparable sale of improved land;

(ii) no amount can be deducted for goodwill whether in analysing the improvements on the land, or any comparable sale of improved land, or otherwise;

(iii) no deduction for any profit and risk allowance or development premium can be made for the realisation of the use of the land, or for continuing the use of the land, for any purpose for which it was being used on the date of valuation;

(iv) if the land is improved and the assessment includes a comparison with sales of vacant or lightly improved land, or with sales for redevelopment, an amount representing the development premium inherent in the value of the land as improved must be added to the level of value established by the sales;

(v) the benefit to the land of the payment of infrastructure charges or of infrastructure construction must be included; and

(c) the term ‘unimproved value’ defined under this section has been given a special meaning that must be applied whether or not that definition