Expect flood of objections

THE EDITOR: Many years ago when I was a young person beginning to know what life is, my father told me that if an investor bought a property to rent it he should receive his investment back in ten years, otherwise that would be a bad deal. That was the standard used.

In those days, interest rates were much higher than what they are today. Back then, if you rented a property for $100,000 per year and the rate of interest was ten per cent, your property would be valued ten times the annual rent, or $1 million. The multiplier of ten times would be called the reciprocal of the interest rate, or an inversion of the rate which is used in present value determinations for perpetuities.

Today the interest rates are much less and, using two per cent as a yardstick, this means that one could use the annual rental value of a property supplied by the Valuation Department and multiply it by 50 to see what your property is worth from the valuers' estimations. Fifty times represent the interest rate reciprocal of two per cent.

A Valsayn friend's annual property rental was valued at almost $1 million per year or $80,000 per month, which is preposterous as he will never ever receive such a rent, not even a quarter of that amount.

By simple valuation methodology the Government valuator would have valued his property asset at 50 times this amount or $50 million. His property is just a simple dwelling.

Something has to be wrong with the valuation methodologies, which appear to be discriminatory and conducted by whim and fancy by untrained people. Valuation is a precise science.

To add more turpentine to the fire, rents in the country are very low now. In fact, there is little demand for rentals as the economy is not what it was before, with many of the valuations done before covid19. This means property taxes could be overcharged in many circumstances.

There are many other issues which would demand an inspection of the methodologies used.

It would be prudent for the Government to have all valuations reassessed to avoid a storm of objections which, from what I am seeing, is going to seriously interfere negatively with the objective. You cannot get blood out of stone and the property tax effort will fail simply because the extraction of wealth from poor householders will not happen.

PETER S MORALLES

Cascade