Why unimproved value is your floor

Unimproved value is the ACT Revenue Office's assessment of what the land is worth under its current Crown lease, ignoring everything built on it. It is published annually per block and it is the number your rates and land tax are calculated from.

It is also a floor, and this is the test that saves people the most money.

The test

Run the residual model on your proposed scheme. If the residual land value comes out below the unimproved value, then a rational buyer who intended to do nothing at all — leave the existing house standing, or rebuild one dwelling — can pay more for the site than you can. Your scheme is destroying value relative to the simplest possible use of the land.

When that happens the instinct is to negotiate harder. That instinct is wrong. The vendor can sell to the do-nothing buyer at a higher price than you can justify, so there is no price at which you win. The problem is on the cost side of your scheme, not the price side of the transaction.

Ratios worth knowing

The honest caveats

Unimproved value is a mass-valuation figure, not a valuation of your block. It lags the market, it is assessed as at 1 January, and it can be appealed. Treat it as a well-informed reference point rather than a market price — but do not dismiss it, because it is the one number in this whole exercise that a government valuer put their name to.