NZ Herald editorial: Valuations create new anxiety for ratepayers

Editorial

Many Aucklanders face a nervous wait in the next few weeks to find what the council thinks their houses are worth.

Some will want the highest valuation they can get, particularly if they plan to sell up.

Although many properties go for sums far exceeding their rating valuation or RV (also known as a council valuation or CV), a higher valuation will help sellers get the best price possible.

It's a different story for people who have no plans to put their home on the market, whose concerns shift to how much their rates may go up under the system.

For those who are retired, a big increase in their rates may mean cutting back their spending or having to dip further into hard-earned savings.

Working families may also find it tough, particularly given wage growth has been so miserly in recent years.

Tenants, too, may see an increase in their rents as landlords seek to recoup rates rises.

For those who don't plan to sell but can comfortably absorb any increase, the three-yearly valuations have been an opportunity to up their mortgage on the back of big jump in their equity.

This extra cash could be used to put in a new bathroom or kitchen, splash out on a boat or take the family on an overseas holiday.

But with property prices coming off the boil, particularly in Auckland, homeowners worried about the headroom on their mortgage will be less likely to splurge on the back of the new RVs this time around.

The release of the RVs also puts the spotlight back on the purpose of the rates we pay. For all they may be resented, rates help fund important community facilities and upgrades to local infrastructure.

But it's becoming increasingly clear that if councils want to avoid rates blowouts, they need access to other sources of revenue.

Auckland, in particular, is suffering from growing pains and having to contend with the strain of historically high levels of immigration.

That, of course, increases the rating base which the council can draw from but also means that it has to spend more to make sure roads, sewerage and other critical infrastructure can cope.

Mayor Phil Goff has been vocal in arguing that his administration needs new ways to pay for this growth.

As well as toll roads and bed taxes, the Auckland mayor this month said he wanted to get his hands on the $239 million of GST paid on Super City rates each year.

His request has so far gone unanswered, as there's no Government to consider it.

And although it is unlikely to be high on its list of priorities, the incoming Government would do well take it seriously.

If not, it should at least start to give Goff - and other local body leaders around the country - more tools to raise revenue so they're less reliant on ratepayers.