FIG 2010 - Valuation System

8/8/2019 FIG 2010 - Valuation System

http://slidepdf.com/reader/full/fig-2010-valuation-system 1/20

NSW Valuation SystemMass Appraisal ModelBruce Helman

Acting Chief Valuer



Purpose of the valuation system

• Provide a base for local council rating and landtax.

• Contribute to the state’s land information system.

• Independently determine compensation followingcompulsory acquisitions of land.

• Provide valuation and property advice togovernment.



Valuation System Governance

• Based on principles of:

– Independence through separation of roles

• Valuer General, LPMA, external contractors,external review

– Accountability through formal agreementswith documented requirements and

independent review processes – Transparency through open access to

information



Role of Land & Property

Management Valuation Services• Maintain Register of Land Values

• Provide valuation service delivery to Valuer

General through Service Level Agreement• Provide policy and valuation expertise

• Provide quality assurance to valuations

• Procure and manage contracts• Manage customer service and objection and

appeals reviews

FIG 15 April 2010



Valuation System Structure

FIG 15 April 2010

NSWGovernment

Legislativeframework

Valuer

GeneralPolicies andStandards

Lands

(LPI)Operations

Service standards inService Level Agreement

Valuation system& advice

Legislation & parliamentaryoversight

Legislation &Ministerial oversight

Advice

Valuation

ContractorsValuationservicesValuation services

in accordance withcontracts

Service definitionin contracts



Valuation System Roles

FIG 15 April 2010

Valuer General

Statutory responsibilities

Land and Property Information

Operational management of valuation system

Rating and Taxing ValuationsValuation of Land Act 1916

Office ofState

RevenueLand Tax

LocalCouncilsCouncilRates

Acquiring authorities(State and Local Government)

Offer of compensation

authority

Independent valuation contractors

Valuation recommendations

Individual land holders

Delegated

Land and Property Information

Quality assurance and issue of valuations

Determinations of CompensationLands Acquisition (Just Terms

Compensation) Act 1991

Notices ofValuation



Separation of Roles

• Clear separation of roles

• Increasing separation between LPMA

and contractors

• Contractor responsibility to determine

market and deliver completed and

quality assured values

FIG 15 April 2010



Resources

• Valuation Services has 140 staff to maintainRegister, manage contracts and provide

quality assurance• 18 Rating & Taxing Contractors servicing 36

rating and taxing contracts

• 3 year contracts with 1 + 1 option

• Provides valuation consultancy services togovernment clients

FIG 15 April 2010



Basis of Valuations

• Valuation of Land Act 1916 as amended

• Section 6A – market value of land excludingimprovements (site value)

• All valuations made at same date - 1 July of eachyear – available to rating & taxing authorities duringNovember

• Mass appraisal system based on components or submarket groups

• Provision for individual valuations where MAmethodology not appropriate

FIG 15 April 2010



Basis of Valuations

• Contractor analyses sufficient salesacross the range of market within a

component• Sample property valued and factor used

to update all in group

• Approx 35000 sales analysed during2009

FIG 15 April 2010



Basis of Valuations

• Components based on like properties withlikely similar market movement

• Vary in size from less than 10 to greater than9000

• One benchmark per component

• Reference benchmarks to test values acrossrange

• Requirement set in contract

FIG 15 April 2010



Component Quality Assurance

• QRP - The relative measure of variation within the

inter-quartile range.QRP = QRANGE / Median Value x 100

FIG 15 April 2010



Land Value Verification

Program• Objective - to improve the valuation data toensure the most accurate application of mass

appraisal methodology• 1.9 million land values individually reviewedsince 1 May 2006

• Challenges in managing balance betweenvaluation quality and timely review

FIG 15 April 2010



Review & Approval

• Standards and delivery requirements set outin contract and Procedures Manual

• Valuation Services manages valuationcontracts

• Monitors contractor progress throughoutvaluation program

• Reviews quality at provisional and final

• Approval after meeting delivery qualitystandards

FIG 15 April 2010



Quality Assurance

• Contractor values monitored throughout theyear’s program

• Quality assurance by regular program• Audits focus on procedure and process to

ensure that quality outcomes are obtained

• Are formal investigations into valuationprocess or outcomes

FIG 15 April 2010



Quality Assurance

• Two types of audit

• Formal program audit from program

• Audit arising from issue identified• Written report containing recommendations

issued to contractor for comment andaction/rectification

• Actions logged and followed up

FIG 15 April 2010



Quality Assurance

• Internationally recognised statistical tests

• Coefficient of Dispersal COD measures variation ofvalues

• Mean Variation of Price MVP measures relationshipbetween sale and value

• Price Related Differential PRD measures variationacross the value range

• Variation from price – measures variation betweensale properties and non sale properties

FIG 15 April 2010



Improvement in Standards

• Percentage of LGA’s meeting Qualitative Statistical Standards

(2004 – 2009)

COD RESIDENTIAL – From 21% to 96.6%BUSINESS - From 31.5% to 94.4%

MVP RESIDENTIAL - From 54.3% to 96.6%

BUSINESS - From 34.85 to 88.8%

PRD RESIDENTIAL - From 32.4% to 84.5%

BUSINESS - From 35.9% to 74.8%

FIG 15 April 2010



Results of Improve Quality

Assurance• Decreased ministerials

• Decreased correspondence from public

• Increased positive comments from public

• Improved qualitative statistics (2004 to 2009)

- COD: RESIDENTIAL – From 23.8 to 4.6

BUSINESS - From 29 to 6.7

- MVP: RESIDENTIAL - From 87 to 95.6

BUSINESS - From 78 to 92.9- PRD: RESIDENTIAL - From 1.15 to 1.02

BUSINESS - From 1.22 to 1.09

FIG 15 April 2010



International Standards

• Statistical standards that are adopted arerecognised internationally

• Australian Property Institute providesstandards documents for Rating & TaxingValuation in Australia/New Zealand

• Valuer General has Land Value Improvement

Committee to determine statistical standardsand methods of imroving quality assurance

FIG 15 April 2010

FIG 2010 - Valuation System

Documents