Palmerston North’s rating system could force people to sell homes

Palmerston North homeowners with modest houses on big sections are calling the city council’s land value rating system unfair, and are calling for change.

About one in 10 submissions on the council’s proposed annual budget ask not only for control over the planned 6.4% total rates increase, but for changes to the way the total bill is shared.

Karina Terrace residents Peter and Isabel Wilson said if the current regime continued, they were likely to have to consider selling their home of more than 40 years.

Peter Wilson told a submissions hearing on Wednesday they had become the “unfortunate victim” of land value rating.

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In 2021/22 they paid $5235 in rates for their large 2428 square metre property.

At that time the land value was $610,000, and the total or capital value was $750,000.

Then came a revaluation of properties in the city, increasing their land value to $1.67 million, and the total value to $1.81m.

That massive leap saw their rates bill increase by 51%, to $7905 in the current financial year.

Wilson said the increase of $2600 was more than some people in the same street paid in total.

He said he knew of other people paying up to $11,000 in rates. People who depended on superannuation for their income would not be able to continue paying such large rates bills, he said.

Another ratepayer, Hugh Wilde, also argued that land value rating was unfair.

He said it made little sense to ignore the value of people’s homes and improvements to their properties in setting rates.

It meant people in new, modern and often large houses on small sections were paying less than those in older suburbs with older houses with larger lawns and gardens.

Farmers were also calling for changes to the rating system to lessen the burden on them.

Federated Farmers central regional policy manager Peter Matich said the council should keep the average rates increase at no more than 6.3% and ensure farms were not rated for services or new facilities they did not use.

He said while farms might have high land values, that did not reflect farmers’ incomes or ability to pay.

He said beef and lamb profits were expected to drop by a third, and dairy prices would fall, and farmers were faced with the prospect of a methane tax.

“Our members are really feeling the pinch.

“Anything you can do to keep our rates down would be appreciated.”

The city council is planning a review of its rating system, which would include the option of a change to capital value rating – the system used by the majority of New Zealand councils.

Differentials applied to various property types and the level of the uniform annual general charge were other tools the council could use to change the incidence of rates.

The review is expected to go out for community consultation during the long-term plan process, and any changes would not take effect until the 2024/25 rating year.