On 26 February 2008, the Queensland Government introduced into State Parliament amendments to the Valuation of Land Act 1944 that will have an impact on many Queensland land owners.

Current Law

Section 3 of the Valuation of Land Act 1944 states that 'unimproved value of land' in relation to improved land is 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 as a bona fide seller would require – assuming that, at the time at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.

The Land Appeal Court decided last year in PT Limited & Westfield Management Limited v. Chief Executive, Department of Natural Resources & Water (an appeal against the Department’s valuation of the Chermside Shopping Centre land) that the definition of 'unimproved value of land' requires the improvements to be treated as if they had never been made, and as a result the value of intangible improvements must be deducted from the value of the land.

Changes to the Law

The amendments to the Act proposed by the new Bill include an amendment to Section 3 to provide that the 'unimproved value of land' includes any increase in the value of the land that has happened in connection with:

1. the making or use of an improvement to the land;
2. a local planning instrument; or
3. a development approval or other approval or authority under an Act, other than a hotel
   licence, relating to the land or any improvement of the land.

The Government has introduced the amendments to the Act to overcome the decision in the PT Limited case.

Retrospective Effect

The changes are retrospective to 30 June 2003 and they constitute a fundamental change to the method of valuation.

Other Amendments

The Bill makes a number of other changes to the Act including changes to the way costs are awarded in an appeal against a valuation. Section 70 of the Act presently provides that costs will not be awarded against the owner where the value of land, as finally determined upon an appeal against the value, is either:

• the value stated by the owner in their notice of appeal against a valuation; or
• is nearer to that value than to the valuation the owner has appealed against.

An updated section of the Bill also provides that each party to an appeal must bear their own costs and the court may only order costs in limited circumstances.

The effect of this change is that landowners will be discouraged from appealing as, even if they win the appeal, they are unlikely to obtain a costs order against the Department.

Impact

The new legislation will severely impact many Queensland land owners as it will significantly increase unimproved values of some land, and therefore the land-owners’ liability for rates and land tax.

For further information on the legislation, please contact a member of our team on 3231 2444.