In everyday New Zealand property usage, how do the terms "RV" and "CV" relate?
Correct Answer
D) They are often different terms for the same figure, the council's capital value
Strictly, a rating valuation (RV) is the council's valuation of a rating unit, recording capital value (CV), land value (LV) and value of improvements. In practice the RV people quote is the capital value, so the two terms usually refer to the same figure. The land-only figure is LV, not RV.
Why This Is the Correct Answer
A rating valuation (RV) records capital value, land value and value of improvements. The headline figure people quote as a property's RV is its capital value, which is why some councils label it CV and others RV.
Why the Other Options Are Wrong
Option A: CV covers land and improvements, while RV covers the land alone
The land-only figure is the land value (LV), not RV; a rating valuation also shows capital value and value of improvements.
Option B: RV covers land and improvements, while CV covers the land alone
This reverses the terms; CV always includes land and improvements, and the land-only figure is LV.
Option C: CV is the figure used for homes, while RV is the one used for commercial property
Rating valuations are set for every property type; CV and RV are not split between residential and commercial property.
Deep Analysis of This Valuation Question
The confusion is about labels, not substance. Whatever the label, the headline rating figure covers land and improvements together, while the land value is shown separately. Licensees should read the council's valuation notice to see which figure is which.
Background Knowledge for Valuation
Under the Rating Valuations Act 1998, the district valuation roll records values for each rating unit, including capital value and land value. The value of improvements is the difference between them. Councils revalue at intervals of not more than three years.
Memory Technique
Think of the rating valuation as a report card: CV is the headline mark, LV is one subject, and value of improvements is the rest.
When a question contrasts RV and CV, remember they usually point to the same headline figure; if it asks for land only, the answer is LV.
Exam Tip for Valuation
Land only = LV. Land plus improvements = CV, which is usually what people mean by RV.
Real World Application in Valuation
A client moving from Auckland, where the council shows a "CV", to another district where people talk about the "RV" asks whether the figures mean different things. The licensee explains that both refer to the capital value in the rating valuation, and points out the separate land value on the notice.
Common Mistakes to Avoid on Valuation Questions
- •Thinking RV means land value only
- •Thinking CV and RV depend on property type
- •Treating either figure as current market value
Related Topics & Key Terms
Key Terms:
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- → What is the primary purpose of Land Value (LV) in New Zealand rating valuations?
- → When using the income approach for valuing a rental property, what is the most critical factor in determining accuracy?
- → A registered valuer is conducting a market analysis for a residential property. Which of the following sales would be considered the most reliable comparable?
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- → A registered valuer is valuing a unique heritage building with no comparable sales available. The building would cost $2.5 million to construct today, but due to its age and condition, suffers from $800,000 in physical depreciation and $300,000 in functional obsolescence. The land value is assessed at $1.2 million. What is the total property value using the cost approach?
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