Owners of 31 Matata properties last night received the news they had been dreading since the catastrophic May floods - their homes will not be rebuilt.

Victim Support workers handed them letters yesterday on behalf of the Whakatane District Council, angering residents, who said the council should have sent its own representatives to break the news.

The word came as heavy rain caused flooding in two areas of the town and two days before a public meeting is held to discuss the council's Hazards and Risk Report into the disaster.

Yesterday's letter did not spell out the options but gave little hope for those whose homes were among the 27 destroyed and more than 80 damaged in the May 18 disaster.

"We wish to advise you that it appears that your property is unlikely to be suitable for residential use in the future," the letter said.

Rob Pearce said the news was expected but still a shock. "We're pretty gutted, really. We would've liked to be able to rebuild there."

Several residents said the council seemed to have made up its mind soon after the disaster that homes in the devastated area would not be rebuilt.

"We knew this was the news we were going to get because they've never done anything down there," said his wife, Marilyn.

The Beach family, whose story of being trapped in their home as it was shoved off its foundations was front-page news in the Herald, expressed a different sentiment about the letter.

"It's lifted a weight off my mind," said Michele Beach. She said she could not bear to rebuild because of memories of that harrowing night.

Her only hope was that the council or the Government would give her a new property or pay compensation equivalent to the land's market value.

Compensation for residents could come from insurance companies and the Earthquake Commission. The commission pays up to $100,000 for houses and $20,000 for contents damaged in a natural disaster.

Bob Whalley was bitter about receiving his letter from Victim Support.

"The council have ducked for cover. They haven't got the guts when it comes to making a decision. Everything gets palmed off to another organisation," he said.

Mrs Pearce, whose mud-filled home was hit again yesterday when the basement flooded, expected Whakatane mayor Colin Holmes or a councillor to deliver the news.

"It should have been them handing out the letters. What a lot of buck-passing."

Her husband said it was "disgusting" that the task was passed to Victim Support.

Council recovery manager Diane Turner said residents had indicated at the last public meeting on June 29 that they wanted to be told in person before tomorrow's meeting if the report found their properties unsuitable for rebuilding. The council did the best it could in the time it had after receiving the report yesterday.

Options for affected property owners would be presented tomorrow and nothing would be done without community consultation.

Two months on, mud, boulders and other debris remain piled high around destroyed houses. Skips filled with rubbish have not been moved.

Mr Whalley said the residents would not accept inadequate compensation from the council. "They're going to have a big fight on their hands."

Yesterday's flooding, which began about 1am, did nothing to ease the tension. A truck driver was rescued after his vehicle got stuck in chest-high water and silt in a railway underpass leading into town, and SH2 was closed until midday.