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Property Valuation Increase And Rate Rise Link Needs Sorting

Property Valuation Increase And Rate Rise Link Needs Sorting

Councils need reminding that skyrocketing property values doesn’t change the level of a Council’s services and therefore shouldn’t result in higher rates.

With the New Zealand Chambers of Commerce, the Auckland Chamber is leading an initiative calling on Mayors and councillors to seek an improved rating model that clearly decouples the link between property valuation and setting rates.

“Rates pay for services delivered by councils. If the level and cost of services provided don’t change, then it is wrong and unfair for a council to impose rate increases just because the value of the property has increases.

“All that does is treats rate payers as cash cows, and is a form of progressive tax,” said Michael Barnett, Auckland Chamber CEO.

Previous calls to individual councils, especially Auckland Council, for a change in the link between property valuations and rates have been ignored, he noted.

But with this week’s confirmation that Auckland residential property values have increased by an average of 46 percent – with some in south Auckland up by a whopping 151 percent due to rezoning from rural to residential – a review of the impact this will have on homeowners’ rates bills next year is urgently needed.

Property values are reviewed every three years, and the effect on an individual property’s rates will depend on how the property’s change in land value compares to each council areas average change.

“That’s not a straight forward calculation. There needs to be greater transparency to ensure that a Mayor or Council who has promised to keep annual rate increases at 2 or 3 percent during its 3-year term does so based solely on service change and/or inflation, and doesn’t take advantage of a property’s increased property value.”

“A fairer, more transparent rates system is long overdue, and achieving that is what Mayors and Councils should focus on, concluded Barnett.”


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