Council entitled to claim unpaid amounts from banks of mortgage holders, leaving them to recover money.

Striking Northland ratepayers could soon find their banks have effectively paid the council's bill from their accounts - and charged them an extra fee.

About 1100 residents are refusing to pay an estimated $2.2 million of rates to Kaipara District Council in protest at the council's $79 million debt, which they say was run up without their consent.

But under a 2002 law change, the council can claim unpaid rates from banks which hold mortgages over the houses and the banks can recover this money from their customers' accounts.

The rates strike is expected to come under increasing pressure this month as the council is entitled to start asking banks to pay on behalf of mortgaged householders.


The BNZ will also start charging a $35 penalty fee to home owners who refuse to pay rates from this week, following the example of the ASB which already charges $110.

BNZ external relations manager Emily Davies said the fee would be nationwide and was not specifically aimed at the Kaipara rates strike. About $72 million of the Kaipara District Council's debt is owed to the BNZ and ANZ banks and the BNZ is understood to be the largest creditor.

Ms Davies said the BNZ had decided to charge the $35 fee from Thursday to recover its costs, which involved sending out two warning letters before deducting the money from a customer's bank account.

She could not discuss the number of properties, the sum of money involved or the size of the Kaipara District Council's debt with BNZ as these were commercially sensitive.

Kiwibank public relations manager Bruce Thompson said his bank did not have a set penalty fee but would always take up the issue with customers, as non-payment was bad for the value of the property and the loan balance.

"It's not an effective way of protesting because you'll be hit with penalties from your council and penalties from your bank - and the rates will be paid."

A spokesman for ANZ said it had no penalty fees.

Mangawhai Ratepayers and Residents Association chairman Bruce Rogan has written to the banks asking them not to make payments on behalf of their customers until the legality of the rates is tested in court.

The council's own legal advice says about $17 million of rates would probably be declared invalid under a High Court challenge, which the association plans to take. The council has made allowance in its annual plan for $19 million to repay ratepayers the money and court costs.

Kaipara's elected councillors stood down in August and were replaced by four commissioners. Chairman of commissioners John Robertson said last week that he did not expect a legal challenge and that if the council lost, it would have to reset the invalid rates correctly.