35 per cent increase reveals rates plan loophole

Photo / Brett Phibbs

Thousands of homeowners who recently made improvements to their properties have been shocked by rates rises far above the Auckland Council's promised 10 per cent transition cap.

The council said it was softening the blow of bringing in a single rating system based on capital (improved) value by limiting the maximum rise to 10 per cent each year for the next three years for residential and farm/lifestyle properties.

The council's first revaluation under capital value came out last year and new valuations were used for the rates struck on July 1.

But a little-known provision of the legislation setting up the Super City council in November 2010 excluded from the benefit of the cap any residents who had changed the value of their properties.

Three North Shore homeowners who opened their rates bills on Tuesday are the first to complain to the Herald, saying their rates for 2012-13 have risen by up to 35 per cent.

Brian Swann of Silverdale said the extent of his rates rise was "unacceptable" for his new home in the Millwater subdivision.

He had lodged a complaint.

The house had its code of compliance approved in early August last year.

"As a result my rates have not been capped at 10 per cent and I now have a 35 per cent rate increase - from $1762 in 2011-12 to $2373 in 2012-13.

"We are penalised for being in the house for less than a year.

"Anyone who has applied for building consent for improvement to their property since July 1 last year is in the same situation."

A Northcote resident, who asked not to be named, said his rates went up 23 per cent instead of 10 per cent because he had renovated the kitchen and bathroom.

He said he bought a rundown home for his family with an early 2011 valuation of $770,000.

When the council revalued it last July for its rating purposes the figure was $10,000 lower.

He complained and the council reassessed it to take the renovations into account.

The new valuation was $850,000 and the rates were $2899 compared with $2238 under the land value system of the former North Shore City Council.

"The council said the actual rate increase was 13 per cent so I missed out on being capped. But it seems like revenue-gathering."

Another North Shore resident, who asked not to be named, said he queried his rates rise of 20 per cent.

"We were told it was because we had made improvements to our property.

"We had a double garage built, which increased our property value by less than 2 per cent. We can't even use it as a sleepout.

Auckland Council finance chief Andrew McKenzie said last night that about 10,000 properties in the region changed value each year.

One example of such a change was subdividing a section to build a second house on it.

"Where you have changed that property, our view is that we cannot transition you from a rate that has no relationship to what your property is now."