Rates

Responsibility for rates

Changes from 1 July 2003 | Exceptions | What should you do if you are affected? | Responsibility for outstanding rates

In 2001, the Government completed a review of local government funding powers. New legislation to replace the the Rating Powers Act 1988 was introduced to Parliament in August 2001, and enacted in March 2002. Through the new Local Government (Rating) Act 2002, the Government is seeking clarity, certainty, and stability in rating matters.

Changes from 1 July 2003

From 1 July 2003 the base unit of liability will be known as the rating unit. The rating unit will be established from a certificate of title. One certificate of title equals one rating unit. When no certificate of title exists for a piece of land, the rating unit will be based on the nearest equivalent to a title. This means that part of a rating unit, eg one shop in a block of ten, will not be separately rated. This, also, means a shift in the primary liability for rates from occupier to owner.

Exceptions

There are some exceptions to the 1 July 2003 changes:

Leases:

leases entered into after 8 August 2001; and
leases registered under section 115 of the Land Transfer Act 1952; and
leases set-up for ten years or more (including renewals); and
leases that provide for the lessee to be entered as the ratepayer of the rating unit

Leases that are contracts, and generally can only be renegotiated as they come up for renewal. This applies where a lessee or sub-lessee is:

entered on the current District Valuation Roll as an "occupier" of the separately rateable property that substantially corresponds to the rating unit entered on the rating information database; and
party to a lease or licence that was signed before 8 August 2001 (This was the date on which the bill was introduced into Parliament, and remains in force); and
party to a lease that either precludes the re-negotiation of rent or any other payments that would allow the owner to be reimbursed for rates if they were liable; or
party to a lease registered under section 115 of the Land Transfer Act 1951

Circumstances where people are using Maori freehold land and are liable for rates on that land.

The New Local Government (Rating) Act 2002 does not prevent owners and tenants from negotiating who actually pays the rates. However, the local authority is obligated to send the rates assessment and rates invoices to the person who is identified on the rating information database as the ratepayer. The final responsibility for ensuring that the rates are paid lies with the ratepayer. This does not change the fact that it is the owner (if different from the ratepayer) who will remain ultimately liable.

What should you do if you are affected?

If you have a lease on a rating unit you should :

check the terms of the lease
consult the Local Government (Rating) Act 2002 and seek legal advice on the effect of the Act on your circumstances
begin discussing the implications of the Act with the owner

If you are the owner of a rating unit you should :

consult the Local Government (Rating) Act 2002 and seek legal advice on the effect of the Act on your circumstances
begin discussing the implications of the Act with the lessees

You may also find it useful to look at the Department of Internal Affairs website

Responsibility for outstanding rates

Local Government (Rating) Act 2002 has shifted the responsibility for paying rates from the occupier of a property to the owner of a property.

Previously, some leases included clauses where the occupier was liable for rates. This no longer applies apart from the exceptions detailed above. From 1 July 2003 the owner of a property has become responsible for rates. This also includes any outstanding rates on that property from any previous years. Property owners in this situation have been sent a letter advising of the amount due. This amount had to be paid by 20 May 2003. Any disputes over payment are resolved between the property owner and the tenant.

Ratepayers are registered in the Rating Information Database and District Valuation Roll. Consult the Local Government (Rating) Act 2002 for more information about who is listed in these records (refer particularly to section 11 of that Act).