Rates

Rates are the charges levied by local and regional councils on property owners to fund council services and infrastructure.

How they are calculated

Most councils use a mix of:

• A general rate based on the property's rating valuation (capital value or land value, depending on the council)
• Uniform annual general charges — a fixed amount per property regardless of value
• Targeted rates for specific services — water, wastewater, refuse, regional transport, and sometimes location-specific levies

Regional council rates are often collected by the territorial authority and appear on the same bill.

What investors need to know

Rates are a significant and non-negotiable holding cost, and they must be in your net yield calculation. They vary substantially between councils for similar properties — a factor worth weighing when comparing regions.

At settlement, rates are apportioned between vendor and purchaser as at the settlement date, so you pay from that day forward.

Rates are generally deductible against rental income.

Common misunderstanding

A higher rating valuation doesn't automatically mean higher rates. Councils set a total rates requirement and apportion it across the ratings base. If every property in the area rose by a similar percentage, your share is broadly unchanged. Your rates rise when the council increases its total take, or when your value rose faster than the average.

Water is charged separately in some areas and included in rates in others. Compare like with like when assessing holding costs across regions.

Unpaid rates attach to the property, so outstanding rates are a matter for your lawyer to check before settlement.

Related terms

Last reviewed: 1 August 2026 · ---

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