New land values coming in September
No, it should not affect your rent!
Avia Collinder, Business Writer
The National Land Agency (NLA) says the revaluation of lands by its survey department should be available in September, making available to the real estate industry and others a new benchmark for estimating property value.
The last survey was done in 2003. The updated version will provide new values for unimproved land, that is, property with no construction, commercial, or agricultural activity.
The new valuation will apply to all parcels of land, but will exclude the buildings and other structures constructed on the property.
At the time the survey began in 2011, it was estimated by real estate expert Edwin Wint that it would reveal an appreciation of properties within a range of 25 per cent for marginal lands and 100 per cent or more for prime locations, given that the period since the last valuation had been over seven years.
Queries from readers to Sunday Business indicate that lessors and renters of property fear the new rates will be used to justify increased rental charges. The Rent Board, when asked about this possibility, directed queries to the Ministry of Transport and Housing.
DEVELOPED PROPERTY NOT TO BE AFFECTED
Real estate experts say, however, that since property taxes are on the unimproved value of land, housing and office space rentals, which are developed property, should not be affected.
The revaluations will inform future calculation of property taxes on land with no structural development, said Kellee King-Campbell, public relations officer with the Business Services Unit of the NLA.
"This calculation will remain as is for this financial year. Any change to this is based on the instructions of the Minister of Finance. The NLA only provides the unimproved values on land, and based on those values, the Ministry of Finance will attribute the relevant taxation percentages."
New revenue measures recently announced by the Minister of Finance include an increase in property taxes. The new rates will be applied as follows:
Flat rate of J$1,000 on the first J$100,000 of unimproved land value;
1.5 per cent applied to values ranging from J$100,000 to J$1 million;
2.0 per cent for values above J$1 million.
The new rates take effect April 1. The Finance Ministry aims to raise J$3.4 billion more for the Treasury from the increase.
Meris Haughton, director of communications at Tax Administration Jamaica (TAJ), said Thursday that Cabinet would determine if and when the new values would be applied to the calculation of property tax.
"That's an issues for the Cabinet. I'm not in a position to respond," Haughton said.
Eric Allen, director of the land valuation division within the NLA, says the Land Valuation Act defines the property against which the taxes can be applied.
"Unimproved value in non-technical language is the market value of land without improvements, for example, the market value of a vacant residential lot, vacant commercial site, or agricultural holding without crops or farm improvements," he said.
"In some jurisdictions, 'unimproved value' is also referred to as 'land value' or 'site value'," Allen said.
The director indicated that the valuation process firsts involved identification of each parcel of land. This is achieved by the use of a unique parcel-numbering system supported by the land valuation maps as well as a computerised database of land information to facilitate the capturing, updating, and retrieval of relevant data.
Next is inventory of each parcel of land involving on-site inspection to establish features such as size, configuration, topography, and soil type - if and where applicable.
The survey process also involves analysis of market transactions.
"Investigation and analysis are primarily targeted at recent sales transactions," Allen said.
The NLA's survey will also engage in classification of properties in which properties are grouped taking into account factors that include geographical location, land use, physical infrastructure, availability of public utilities, and community facilities within the locality.
According to the director of surveys, the process additionally involves producing evidence of market value, the most reliable being sales of vacant sites at the 'valuation date'.
"Sales of improved parcels of land may also be analysed as supporting evidence," Allen added.
Based on sales evidence, a unit value per lot, per site, per square metre or square foot, per hectare or acre is established and used as the basis for establishing the value of comparable parcels of land for effecting adjustments where needed.
"It is of interest to note that the Land Valuation Act provides for landowners who may be dissatisfied with their valuations to raise objections not only to value, but to other aspects, including ownership or particulars of the property appearing on the notice of valuation," Allen said.
Properties in Jamaica which are exempt from property tax, according to the TAJ website, include buildings and lands held in trust exclusively for public religious worship together with the lands used as churchyards or burial grounds immediately attached to them.
Other exemptions are buildings and lands used solely for charitable or educational purposes and which are supported solely by charitable or missionary funds; those belonging to and used by the University of the West Indies and the Council of Legal Education; those belonging to primary and secondary schools receiving any payment out of the Consolidated Fund; and commercial schools or preparatory schools with not less than 12 scholars in average attendance.
Buildings and lands belonging to the Government of Jamaica as well as approved private hospitals, social, and charitable or cultural organisations are also exempt.