Land Unit Classification System for Rural Valuation (LUCS)
Recipient of the 2021 APSEA Award for Spatial Enablement
Inspired by a GIS-based valuation framework developed by Office of the NZ Valuer General, a need was identified to develop a more detailed spatial solution to account for the wide range of rural land use across NSW. The LUCS project (Land Unit Classification System for Rural Evaluation) considers additional attributes of land such as soil fertility, vegetation density and land use, resulting in an in-depth classification system reflecting the complex patterns of agricultural properties and practices encountered by valuers.
While the goal of the project was relatively straight forward, many of the concepts required to generate the desired results had never been attempted, and there was also no reference framework for property characterisation that could guide the design of LUCS. This introduced significant uncertainties based on the initial assumptions at project inception regarding scope, technical options and approach to design and stakeholder engagement. Adding to the complexity was the need to cater for vastly different rural landscapes, from the east coast to the rangelands in the far west of NSW, from northern tablelands to the riverine lands in the south.
An agile approach was used to define the classification system, led by the valuers themselves. Many iterations of the system were delivered initially using a prototype developed through close consultation with a small reference group of valuers, followed by continual improvement of the system in response to consultation with the broader valuer profession.
“The key objective was to deliver a classification system that reflected the logic used by the valuers themselves when valuing property. State-wide datasets then needed to be identified and interpreted to reflect and support that decision process.”
Application
LUCS provides valuers with a rapid and consistent approach for undertaking a key part of their valuation process, i.e., characterising a property for assessment.
Historically, a valuation has required a site visit to assess attributes such as, soil, relief, vegetation, land use and signs of un/productiveness, resulting in a written assessment of the property. The results of this assessment process have been somewhat subjective depending on the background and experience of the valuer. In addition, there was no standard description of land applied, meaning that valuers looking at the same parcel could describe the land in very different terms, leading to inconsistency in valuation application. In extreme cases different valuers may emphasise different characteristics of a property resulting in significantly different valuations, which can in turn give rise to objections that were costly to investigate and resolve.
LUCS was commissioned by the NSW Valuer General to provide a consistent characterisation of the agricultural potential of rural land, which valuers could easily incorporate in their assessment process. LUCS utilises data from over ten authoritative spatial datasets produced by organisations such as CSIRO, NSW Office of Environment & Heritage, and ABARES. The LUCS project developed a suite of Python-based scripts for processing the data into a single seamless raster dataset, offering all valuers in NSW a standard set of property reports ̶ a common, objective, spatially derived, baseline characterisation of properties.
To further spatially-enable property characterisation in the valuation industry, the LUCS project also developed a purpose-built web application for valuers to access property reports. This interface negates the need for valuers to have GIS skills or access to GIS software, which significantly lowers the threshold of spatial expertise needed by valuers to use property reports in their routine operations.
The LUCS classification comprises of seven primary land classes which indicate agricultural potential of land. Examples include 1st and 2nd class cultivation, and Open or Lightly Timbered Native Grazing. The seven primary classes have been derived through a complex raster classification approach which considers input data such as land use, vegetation mapping, soil fertility and slope. Each primary class is further supplemented by three subclasses which provide, where applicable, more detailed information of irrigation, slope and soil type to help valuers spatially highlight areas of higher value in a property compared with similar properties nearby. The slope and soil type classification have been derived from very detailed datasets which have been simplified to better suit the purposes of valuation, based on feedback from the valuer profession.
“The result is that valuers can access a baseline classification for a property rapidly, from an intuitive and accessible web application, that has been generated from authoritative data and analysed in a consistent manner.”
A valuer will export a Property Report from the LUCS application and incorporate it into the valuation worksheet. The valuer will then assign a rate per hectare to each primary class or subclass as a basis for valuation of the property. For large valuation firms LUCS supports the bulk download of property reports for uploading into their respective IT systems to support valuations by their staff.
LUCS also supports generating a URL for each property report, this supports collaborative valuation and auditing of valuation quality, as different valuers can access the same property reports to provide comments and validations.
Impact
LUCS seeks to reduce the risk of inconsistent valuations while still requiring the professional judgement of a valuer. It provides the valuer with the ability to determine the individual classifications of a sale property and attribute a value to each part, then using that information, valuers can apply evidence of value for land classes to similar land classes of other properties in determining their value. The level of objection to land values is expected to reduce as the Valuer General can demonstrate to landowners an evidence-based approach to determining the value on individual land classes. Where an objection is lodged, the valuer undertaking the objection review uses the same classification approach and therefore there is less likelihood that values would be amended solely based on a different interpretation of land class.
Any on-ground variations will be recorded against the respective classes. Not only will the entire LUCS database and recorded variations form an annual auditable base for easier dispute resolution, but they will also provide the evidence for future improvements of the algorithms and choice of input data to finetune the LUCS map and property reports.