Double-digit rate increases loom

Rates are set to increase in Auckland's hottest suburbs. Photo / File

Aucklanders living in the ‘hottest suburbs’ could be the big losers, while businesses will come out winners

Rate rises will hit double digits in Auckland's hottest suburbs unless the council takes action on other fronts, says the council's finance boss.

Soaring property values in suburbs like Hobsonville and Mangere Bridge will lead to increases of more than 10 per cent, acting chief finance officer Kevin Ramsay told the Herald.

He said the council faced "some hard conversations" to lessen the impact on rates from the latest property valuations, which have risen, on average, by 29 per cent.

House prices have risen the most, by 34.8 per cent, twice as much as 15.7 per cent for industrial property and 16.2 per cent for commercial. Hobsonville house prices jumped 65 per cent, followed by Pt England (62 per cent), New Windsor (58 per cent), Glen Innes (55 per cent) and Mangere Bridge (53 per cent).

What the new valuations mean is a rates rise for properties above the 29 per cent average and a reduction for properties below the average.

On the latest figures, businesses are in line for rates reductions and home owners, particularly in city-fringe suburbs where house prices have risen the most, are in line for the biggest increases.

Mr Ramsay said the council had other levers, which could smooth out large increases and decreases from the latest property valuations.

They include the annual general charge of $373 and a 10-year programme to slowly reduce higher rates on business properties.

Increasing the annual charge will reduce the rates for high-value properties, but lead to higher rates for low-value properties.

Likewise, the business differential programme reduces rates for business and increases rates for households. This year, it led to household rates rising by 3.7 per cent, 1.2 per cent above the 2.5 per cent overall increase.

Mr Ramsay said Aucklanders would not know what their new rates would be until all the levers - property valuations, the annual charge, business differential and an overall rates increase - had been determined.

Mayor Len Brown has proposed an overall rates increase of 2.5 per cent next year.

Mr Brown, who has been committed to reducing the business differential, is under pressure to change his position, given that businesses are in line for lower rates from the new valuations.

The Albert-Eden Local Board has voted for a pause in the reduction of the business differential. Otherwise, said board chairman Peter Haines, huge residential rates increases are in prospect.

"It's not as though it's a radical idea. John Banks did it in his second term," said Mr Haines, a member of the left-leaning City Vision ticket.

"When the mayor talks about an average 2.5 per cent rates increase, he means less than that for businesses, and around 4 per cent for residential ratepayers, due to the reduction in the differential. And that's before the changes in valuations."

Q&A

How much will rates go up?
It is too early to say. The new property valuations are only one factor. Until the council sets the annual charge, business differential and overall rates increase, final proposed rates cannot be set.

What if I live in a suburb with a big property valuation rise?
Chances are you will get an increase above the proposed average, which looks likely to be 2.5 per cent.

Are businesses in line for a rates reduction?
At this stage, yes. Their new valuations are much lower than residential properties and the council is gradually reducing their rates, which are higher than residential rates.

What can the council do to reduce household rates?
It can change the annual general charge to smooth out the increases and stop reducing business rates.

When will I know what my rates will be next year?
You should know what your proposed rates are next month. The rates policy will go out to public consultation in the New Year and rates will be set about May.