IV to kill off RV: My Prediction

[minimoke]

I predict that within 18 months we will see the demise of the meaningless RV (Rating Valuation) used in marketing property. In its place we'll see greater use of (IV) Insured Value.

It won't be SI (Sum Insured) since that doesn't look too flash as a marketing tool. Much better to have a large number like IV which will be greater than RV if for no other reason that it needs to include demolitions and ground work costs rater than the value of capital improvements.

Then over time we will see RV move towards the IV value as councils get smart and legislate that IV details need to be registered with council so they can use this data rather than spend money on getting random valuations done throughout their area.

[Banksie]

So if I don't insure my house - will my rates be 0?

[CJ]

I haven't looked into this yet as my last annual payment was before the changes were made. Does the IV include land. Especially if there is development potential the land value can be more of a factor than the land.

Auckland's new Unitary plan will also have a big effect on this if your land is big enought to put townhouses on.

[CJ]

So if I don't insure my house - will my rates be 0?I do wonder how so many people get away without insurance (the sob stories after a natural disaster) when it is a requirement of a mortgage. I know there are a few people in NZ that are mortgage free but the sob stories are always, now we are left with a property worth less than the mortgage.

[minimoke]

So if I don't insure my house - will my rates be 0?The council will run a simple spreadsheet with two lines.
=IF(IV=0,(RV+(RV*0.1)),IV)) the .1 being whatever your local building inflation rate is. Christchurch is running somewhere around 10%

and

if iv=0, call"0800nutter"

[minimoke]

Does the IV include land. Especially if there is development potential the land value can be more of a factor than the land.

Generally you can't insure land. At the moment there are red zoners in court arguing that their land which they valued at say $200,000 (based on say purchase price or perhaps developed land value) to build their dream home on should have a govt buy out value of something similar rather than the offered 50% of RV. They have no insurance and their land is now worth $0.00

Its a changing insurance market - you may find insurers prepared to offer insurance on land damage - heres another prediction. Insurers will step in to meet this demand.

Your future IV will need to include a sum for demolition and presumably some land remediation / development resulting from that demolition.

Prepare your self for a shock or surprise. The IV will be much more than you think and your insurance is going to go up heaps

[CJ]

There is a hole in your simple new 'rating' formula. IV doesn't include land which, outside of Chch, is actually worth something. ;)

[Banksie]

if iv=0, call"0800nutter"

:D...............

[minimoke]

There is a hole in your simple new 'rating' formula. IV doesn't include land which, outside of Chch, is actually worth something. ;)
RV doesn't need land value. All it needs is a council budget (say $1,000,000) and properties to apportion that budget to. So if you have 1000 properties with an IV of $100,000 their RV will be the same. And they will pay $1,000 rates each

For those people that only own land the council will just make up a number to fill in the difference. So if you have 999 people with IV's of $100,000 their RV's will be the same and may contribute $999,500 to the rates (or $1000.50) and the land owner may have to pay the remainder $500.

[CJ]

RV doesn't need land value.True.

However, it is perceived to be fairer in a "those who can afford it should pay more" way (as opposed to user pays)

[janner]

Beginning to sound like more of a one way street, than it ever was for the insurance industry....