Auckland Council will give $6 million of grants to homeowners and businesses ineligible for a rates cap.

There was an outcry from thousands of homeowners around the city when it was revealed that a large number of ratepayers would not get a 10 per cent transition cap, having made improvements to their homes.

The policy is that all ratepayers should not subsidise those who had made changes to their properties.

Yesterday the council's Strategy and Finance Committee agreed to a scheme that would let those ratepayers receive a rates cap - the same as those who had not made any alterations to their homes.


Around 5400 homeowners and 600 businesses will benefit, meaning $2 million of the grant scheme will go to homeowners and the remaining $4 million will go to businesses.

Mayor Len Brown said the council was doing all it could to make things fair for everyone.

"A total of $4 million of the $6 million cost of this latest council initiative will go towards ensuring businesses are not unfairly affected by the Government's decision to create a single rating system for Auckland.

"The percentage of rates paid by business will decrease by 0.1 per cent every year for the next 10 years, saving business $140 million."

Earlier yesterday, results from a survey carried out by the Auckland Chamber of Commerce showed that many small firms were feeling the pressure of the council's new business rates and some said they may be forced to close.

The survey of more than 600 business owners found that up to 42 per cent of businesses' rates had risen more than 10 per cent.

One in 10 said their bill had gone up 25 per cent and 19 per cent of businesses surveyed said they had an increase of 5 per cent.

The results came after the council announced that for every dollar in rates paid by households, urban businesses would be charged $2.63 and rural businesses $2.37.

The survey also revealed that several businesses were considering closing and moving overseas.

Chamber chief executive Michael Barnett slammed the council for rates that he called unfair and harsh to business owners, saying the $2.63 differential should be removed.

"You can imagine a small business guy looking at his rates bill and thinking, 'Oh, no'."

After the council's announcement that $4 million was to go to businesses, Mr Barnett said last night he hoped many of those businesses surveyed would be included.

However, he called the move "band-aid politics," and questioned which group in the community would lose out as a result.

The downside, councillor Cameron Brewer said yesterday, is that the change was a large, unexpected expense. It would also make it harder to keep rates down in years to come.