Rates
Annual property taxes charged by your local council to fund public services, infrastructure, and local government operations.
What is a Rates?
Rates are the local property taxes that every property owner in New Zealand must pay to their local council. They fund essential services including roads, water supply, wastewater, rubbish collection, parks, libraries, and local government administration.
Rates are calculated based on the property's capital value (or land value, depending on the council) as determined by the most recent council valuation. Each council sets its own rates, so the amount varies significantly between districts. A property in Auckland might pay $3,000-$6,000 per year, while a similar property in a smaller town might pay $2,000-$4,000.
Rates typically include a general rate (based on property value), a uniform annual general charge (a flat fee per property), and targeted rates for specific services like water, wastewater, and rubbish collection. Some councils also charge targeted rates for specific infrastructure projects.
Why It Matters for Due Diligence
Rates are an ongoing cost of property ownership that you need to budget for. Check the current annual rates for any property you're considering and factor them into your affordability calculations.
Also check whether any rates are overdue. Outstanding rates can become a charge on the property, and in extreme cases the council can sell the property to recover unpaid rates. Your lawyer will check for outstanding rates as part of the settlement process.
How to Check
Current rates are shown on the LIM report and are available from the council's website by searching the property address. The real estate agent should also be able to tell you the annual rates. Your lawyer will confirm all rates are paid up to date before settlement and apportion rates between you and the seller based on the settlement date.
Frequently Asked Questions
How are rates calculated?
Rates are based on your property's capital value (or land value) as assessed by the council. The council sets a rate in the dollar each year based on its budget. Your rates bill is the rate in the dollar multiplied by your property's assessed value, plus any fixed charges and targeted rates.
Can I get a rates rebate?
If you're on a low income, you may qualify for a central government rates rebate. The rebate is income-tested and can provide up to several hundred dollars off your rates bill per year. Apply through your local council.
Related Terms
Capital Value (CV)
GlossaryThe council's assessed total value of a property, including both the land and all buildings or improvements, used primarily for calculating rates.
Land Value
GlossaryThe council's assessed value of the bare land only, excluding any buildings or improvements, used as part of the rating valuation.
LIM Report
GlossaryA Land Information Memorandum — an official council report summarising everything the council knows about a property.
Body Corporate Levies
GlossaryRegular payments made by all unit title owners to fund the maintenance and management of shared property in a multi-unit development.
Settlement
GlossaryThe day ownership of a property officially transfers from the seller to the buyer and the purchase price is paid in full.
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