Land Value
The council's assessed value of the bare land only, excluding any buildings or improvements, used as part of the rating valuation.
What is a Land Value?
Land value is the council's estimate of what the bare land would be worth if it had no buildings or improvements on it. It's one of the three components of the council's rating valuation, alongside capital value (total property value) and improvement value (value of buildings and improvements).
Land value is influenced by factors including location, size, shape, contour, zoning, and access to services. A flat, well-located section in a desirable suburb will have a higher land value than a steep, remote section of the same size.
Some councils use land value rather than capital value as the basis for calculating rates. This can benefit owners of well-improved properties (since they're rated only on the land, not the buildings) but disadvantages owners of unimproved or lightly improved land. Understanding which valuation base your council uses helps you anticipate your rates.
Why It Matters for Due Diligence
Land value is particularly important if you're buying a property for its development potential. A high land value relative to capital value suggests the existing buildings add little value and the property's worth is in the land โ which may make it a candidate for subdivision or redevelopment.
Conversely, if improvement value is high relative to land value, the buildings are contributing significantly to the property's value. This is typical of well-maintained or recently renovated homes.
How to Check
Land value is shown alongside capital value and improvement value on the council's property records, the QV website (qv.co.nz), and the LIM report. Compare land values across similar properties in the area to understand whether the land component is reasonable.
Frequently Asked Questions
Why does land value matter when buying a house?
Land value tells you what portion of the property's worth comes from the location versus the buildings. A property where land value is a high percentage of capital value may have development potential. It also helps you understand your rates if your council rates on land value.
Can land value decrease?
Yes. Land values can decrease if market conditions change, if the area becomes less desirable, or if new information emerges (such as natural hazard reclassification). However, in most urban areas of New Zealand, land values have trended upward over the long term.
Related Terms
Capital Value (CV)
GlossaryThe council's assessed total value of a property, including both the land and all buildings or improvements, used primarily for calculating rates.
Improvement Value
GlossaryThe council's assessed value of the buildings and other improvements on a property, calculated as the difference between capital value and land value.
Latest Practicable Valuation (LPV)
GlossaryThe council's most recent rateable valuation of a property, used to calculate rates and provide a general indication of property value.
Rates
GlossaryAnnual property taxes charged by your local council to fund public services, infrastructure, and local government operations.
Development Contribution
GlossaryA charge levied by the local council on new developments to help fund the infrastructure needed to support growth, such as roads, water, and reserves.
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