C15/2013 Annual Property Valuation Exercise - 2012-2013 FY

Replaces DI No.

N/A

Purpose

The purpose of this Departmental Instruction is to provide advice and information on the annual valuation exercise and the process used in the 2012-13 FY, and to remind staff of the importance of correct recording of the Australian Valuation Office (AVO) Job Number and ID Number when receiving AVO valuations.

Overview

Historically, Income Support cases requiring a property valuation that were within the prescribed parameters were selected and forwarded to the AVO for valuation.

DI C — 05/2012 advised that the annual exercise was under review due to savings required in response to the additional efficiency dividend (ED) imposed. A number of changes resulted from this review including changes to the Aged Care valuation process and changes to the conduct of the AVO annual exercise.

DVA and the AVO negotiated the criteria for the 2012-13 FY annual exercise resulting in a reduced number of cases undergoing a review and a different methodology being applied.

Changes to the exercise

The 2012-13 FY AVO annual exercise leveraged a trial of a new product developed by the AVO enabling DVA to undertake more assessments with the reduced funds available. The product – Valuer Assisted Desk Based Assessment (VADA) – is based on the premise that real estate reviews should be targeted on properties where the property market is more volatile and likely to produce a change in asset value. The VADA product is only relevant to non complex property types such as a house, townhouse, flats and vacant land. VADA is not a valuation. Rather it is being designed as a 'light touch' desk top assessment undertaken by a qualified valuer.

The date of the AVO VADA for the 2012-13 FY annual exercise has been amended to 31 May 2013. This is the date that is to be used when actioning cases in the Pensioner Information Processing System (PIPS).

The AVO was able to undertake some additional valuations to the initial exercise. The additional cases were not part of the VADA trial and were completed using standard valuation methods.

Data extraction

The data extraction provided to the AVO between November 2012 and June 2013 included updated listings. Additional valuations were undertaken in June 2013 that were not part of the VADA trial.

Criteria for extracting cases

A sample of Income Support pension recipients (SP, AP or ISS) were selected for a VADA who:

• owned a property with no AVO valuation since 1 December 2011; and 
• were either:

• assets tested, or
• income tested and assets within $200,000 of their prescribed assets limit (PAL).

The additional cases criteria was amended to within $100,000 of the PAL.

Cases excluded from exercise

The following criteria excluded properties from the 2012-13 FY bulk run:

• properties that have had a property valuation completed since 1 December 2011; and
• clients assessed as blinded and not being paid rent assistance.

Number of cases extracted

The following is a breakdown of the total number of cases for the 2012-13 FY annual exercise. Some cases will require a manual update or further investigation.  340 cases were scheduled for the 'auto' run on 8 July 2013.  A number of cases could not be included in the run as the previous Job Number and ID number had not been data collected in PIPS.

State

Total

NSW

157

QLD

119

SA

25

TAS

20

VIC

126

WA

74

Total

521

Correct completion of AVO details

A higher than anticipated number of valuation cases could not be included in the auto update process as some staff failed to correctly record the AVO Job Number and ID Number. The result is manual action on more cases than necessary is required. It is important that, in future, staff follow the correct procedure to minimize manual cases.

Manual cases

The Assistant Director Reviews, Income Support & Grants Branch, will oversee the manual cases for the 2012-13 FY exercise.

Income Support Adelaide will action the following cases:

• where the assessment moves from the income test to the assets test as a result of the property valuation, including the follow up action at the end of the 3‑month period of grace;
• increase to pension due to a reduced property valuation.

Income Support Adelaide will be responsible for the remaining manual cases arising from the annual exercise and cases where the property has been sold or has been incorrectly recorded.

3 month grace period

There is a maximum 3 month grace period commencing from the date of the new pension rate determination for those income tested pensioners affected by property reviews. The grace period enables pensioners to rearrange their circumstances, should they choose, before the pension is varied due to the property valuation.

For the 2012-2013 FY property valuation exercise 57 cases have been identified as income tested and may be affected by the 3 month grace period.

Where the pensioner qualifies for the 3 month grace period the determination to reduce pension will need to be made and the pensioner notified accordingly.

AVO conduct valuations

The AVO conducted the property valuations in the period from April 2013 to June 2013.

The AVO returned the updated valuation information to DVA on 6 June 2013 for the VADA annual exercise cases and on 3 July 2013 for the additional cases.

Updating property value and pension

A run was scheduled on 8 July 2013 to automatically upload and reassess the client's record by the AVO Batch Reassessment program for continuation cases and asset tested reductions.

Date of valuation to be used in PIPS

The date of valuation to be used is 31 May 2013 when updating cases in PIPS for this exercise.

This is the date used by the AVO to value the properties.  Even though the additional cases were valued in June the date of valuation to be recorded is to be 31 May 2013.  This will enable easier reference for any future bulk exercises.

Date of effect – reduction of property value

The date of effect where the value of the property has reduced is the date the new valuation data was returned from the AVO.  There are 2 dates that may be applicable i.e. 6 June or 3 July 2013.

Date of effect – increase of property value

For cases where the value of the property has either increased or remained unchanged, the date of effect is to be 9 July 2013, being day 1 of the first full pension period after 1 July which is the usual effective date of the annual indexation of the Ordinary Income Free Area, Asset Value Limit and Adjusted Income Free Area.

List of extracted cases

A spreadsheet containing the lists of cases identified for the annual exercise is available from Scott Sandercock, the Team Leader Reviews in Adelaide, on 08 8290 0405 if required. The manual cases will be loaded into DRS.

Client querying property valuation

Should a client query the property value assessed by an AVO VADA a request to the AVO for a property valuation through the usual channel should be conducted as the next step prior to a Section 57 request. Please advise the Team Leader Reviews in Adelaide should this occur.

Duplicate requests

To avoid submitting duplicate valuation requests to the AVO, staff are encouraged to check the spreadsheet in TRIM or DRS.

Future Property valuation exercises

Future annual exercises are under review and an evaluation will be undertaken on this years exercise.  DVA and AVO have regular meetings and this will continue to be a standard agenda item.

Valuations should continue to be requested from the AVO for clients who are asset tested or within $10,000 of their PAL and there has not been an AVO valuation in the last 12 months.

Contact Officers

The annual exercise is managed by Barbara Wozniak A/D QA, Governance & IDU and Rob Manton A/D Reviews Income Support.  They can be contacted on 08 8290 0395 and 08 8290 0219 respectively.