About the scheme

> Councils offering the scheme
> History
> Facts about the scheme
> Other information

Councils offering the scheme

Currently the councils below are offering rates postponement to eligible ratepayers. Click on the council name to link directly to their rates postponement policy information.

Ashburton District Council Environment Waikato Far North District Council Gisbourne District Council Kapiti Coast District Council Marlborough District Council Masterton District Council Nelson City Council Queenstown Lakes District Council Rodney District Council Rotorua District Council South Wairarapa District Council Thames-Coromandel District Council Western Bay of Plenty District Council

These fourteen councils make up the Rates Postponement Consortium.

History

Rates postponement is not, in fact, new. Before 2002, the Rating Powers Act did include a provision for rates to be postponed, however, this was only on the grounds of hardship. Due to the strict eligibility conditions, very few people qualified.

The Local Government (Rating) Act 2002 and the Local Government Act 2002 changed the law on a council’s powers to postpone rates payments. The changes allow a council to adopt whatever rates postponement policy it chooses. Councils are no longer limited to offering postponement only to those with financial hardship.

Western Bay of Plenty District Council were first to realise the potential of this new legislation. In their district, they were faced with booming population growth and a high elderly population who were typically “asset rich but cash poor”. This was combined with increasing pressures on infrastructure and the need to upgrade services to meet environmental and quality of life issues for all residents. Western Bay considered how they could provide these services while still keeping rates affordable, particularly for their older population.

Aware of overseas schemes that allowed older property owners to postpone payment of property taxes (the equivalent of rates), Western Bay asked McKinlay Douglas Limited, Tauranga-based public policy specialists, to investigate global options for postponing rates. After considering overseas experience, and the options available under New Zealand legislation, Western Bay took a proposed rates postponement scheme out to public consultation in early 2003. That proposal was adopted and the council then sought interest from other councils, recognising that:

• Many other councils had the same interest in making it easier for older ratepayers to manage their financial affairs.
• There were real advantages in working together, especially in dealing with government and other major stakeholders.

In 2004 five other councils joined up with Western Bay of Plenty District Council, and began offering the Rates Postponement Scheme, which is managed by RP Scheme Managers Ltd, a subsidiary of McKinlay Douglas Limited.

Facts about the scheme

The scheme is primarily about choice. It is an option that may mean a person can enhance their quality of life with the money that they would otherwise be using to pay rates. Or it may simply mean an older person may afford to be able to live in their own home longer.

The scheme is predominantly aimed at ratepayers 65 years and older, as this group is generally recognised as having a high level of equity in their homes, but are often on limited incomes. Older ratepayers can postpone their rates indefinitely if they choose. The accrued rates and charges are then paid back from the person’s estate when they die.

Some councils also offer rates postponement for those under 65, although this is for a fixed period of time. These ratepayers can postpone their rates for a period of up to 15 years. At the end of the agreed term, all the rates and charges are then repayable.

The scheme is flexible, in that people can choose to postpone all or just part of their rates. This can be for just a short time, and they can repay these in full or in part at any time, without penalty.

One requirement of the scheme is that the full cost of postponement must be met by the ratepayer (ie interest charges and administrative costs). This means that the scheme is not subsidised by other ratepayers. But any charges incurred are not payable until the postponed rates are recovered.

Costs vary slightly depending on the individual council’s policy, but generally the annual charges, in addition to the accrued rates payments, are:

• Interest cost, at the council’s borrowing rate (to make up for the cost of borrowing to replace the “lost” revenue)
• 1% levy for management of the scheme
• 0.25% levy for a reserve fund (for any unrecoverable money)
• an annual administration fee.

There is also a one off cost for “decision facilitation” (see below).

An important requirement of the scheme is attending a “decision facilitation” meeting. Its purpose is to ensure that ratepayers considering postponement are enabled to make an informed decision. Relationship Services provide this service for all applicants.

In order to protect the council (and other ratepayers), the Local Government (Rating) Act allows the council to register a charge against the title covering the amount of outstanding rates and charges to ensure their repayment when the property changes hands (Note: ratepayers have the right to repay part or all of postponed rates at any time).

For more detailed information about a specific council’s rates postponement policy, the links above (under "councils offering the scheme") link directly to each council's rates postponement policy. You can also contact the council directly.

Other information

Click here… for more background material on the rates postponement project.