Wednesday, August 24, 2011

WINNERS AND LOSERS, HOW TO AVOID THAT?

Stuff and its Press contributor have got a story on a couple of "Red Zone" victims and their government offer for their properties.

One couple with two kiddies are apparently $160 k worse off and the other says she is settled and $100k better off.

The nature of the beast will have these differentials because so many have, over time, regarded the "Ratable Value" as an actual Market Value of a property.
A falacy that is widely held through ignorance that is perpetrated by an equally ignorant MSM who continue to muddle RV with Market value.
Of course the settlements for RZ Victims are based on the 2007 RV in the absence of any other fixed point.

Up until around 25/30 years ago there was a relativity between the two figures supported by actual inspections by trained valuers in the govt valuation dept undertaking triennial "valuations".
These became diluted as inspections were replaced by 'desktop' figures calculated using inflation figures, and official documentation for major rebuilds supplemented by inspections following appeals whether to raise or lower the RV for whatever reason.
Todays RV has absolutely no relevance to MV other than as a point of discussion.

The complication for case 1 above was they had a contemporary private Valuation of $100 k above the 2007 RV and admitted they paid another $10k to purchase the property plus another $50k on improvements,leaving them a notional $160k short.

The Government has for reasons of expediency and moving on chosen the 2007 RV as the settlement figure and many have said that as at Sept 3rd 2010 that was generous following the effects of the recession on property values. So how will that fact be factored in and how much of the $160k had already been eroded in the case of these two people

Of course the second lady in the article aint saying anything by way of a question.

It was a 'disaster' and it is obvious that some will be better off and some will lose, shit happens and a solution that satisfies all will delay progress and cost many millions more to complete.

In the late eighties I lost around $250k due entirely to the very necessary reforms following the stupidity of the Muldoon economic "miracle". We just sucked that up and got on with our lives and I would recommend that path in this case.

I am aware of many thousands of settlement outcomes from EQC that appear to me to be somewhat short in the "basic equity" stakes and getting bogged down here will IMO solve nothing.

However it made a great headline and I can see the Claytons MP will be frothing at the thought.

2 comments:

Anonymous said...

Brilliant post.

Of course, the first couple are perfectly entitled to reject the Red Zone offer and see how their chips fall dealing directly with EQC and their insurer - like pretty much the rest of Canterbury.

CAL

Anonymous said...

Fine, quite generous based on the 2007/8 GV. But it does not help those in with such a GV if they wish to remain in ChCh because escalating land prices in suitable areas are putting land prices out of reach
Explain this GD? - I guess its supply and demand?