Effects of tangible and intangible green elements of stratified residential property on local authority property tax assessment revenue in Johor Bahru

Abstract

Property tax assessment revenue is the main income of local authority and is used to provide services and maintenance to the community. Past research has found the link between property value and property tax whereby any differences affecting property value reflect the property tax assessment value. Over decades, numerous studies have been conducted to investigate the relationship between green elements and property value. Past research has identified tangible elements of green building: green envelope components that affect property value. However, to date, no research has been conducted to determine the effect of both tangible and intangible green elements on property value. Henceforth, this research intends to identify and measure the effect of intangible green elements on local authority property tax revenue. Three objectives have been outlined in this research which are, 1) To identify tangible and intangible green elements on the property, 2) To measure the effect of tangible and intangible green elements on property value, and 3) To validate the effect of tangible and intangible green elements on local authority property tax assessment revenue. A comprehensive review of literature and guidelines by green rating tools was conducted and analysed through systematic analysis. The findings are used to construct questionnaires and distributed among property valuers to identify the effects of tangible and intangible green elements on property value. Furthermore, hedonic models through multiple regression analysis were developed to measure the percentage of value increment and decrement for each green element. The results are then used to validate the effect of tangible and intangible green elements on local authorities’ property tax assessments revenue. The findings show local authorities’ property tax assessment revenue is estimated to increase by 36.4% if the property under their administrative area implements green elements that have a positive effect on the value and decrease by 7.0% if the property under their administrative area implements green elements that have a negative effect on value. This research is significant for the local authority to support sustainable agenda by promoting green building development at the local level.