Council rates explained: a home owner’s guide

Council rates are a bit like a tax on homeowners. They’re a way for councils to raise money to provide services and infrastructure like waste collection, transportation, pipes for water and stormwater, community spaces and parks. 

You only pay rates if you own a residential or commercial property - not if you’re renting. 

Rates are often paid annually, but some councils provide options to split your rates bill into monthly, or quarterly payments. 

Each council has an amount they need to charge ratepayers in their area to cover their costs. They apportion who pays what based on property value. Generally if your property is worth more, your rates bill will be higher. 

A valuation agency like Quotable Value uses a computer analysis based on council information to work out your property’s approximate value. They don’t actually visit your property so this calculation is based on what they know already, such as nearby recent sales, land size, house size, and consented improvements. This value is called a ratings valuation or RV.

Ratings valuations are completed every three years, and, until the next one, your rates will be based on this number. 

1. Land value: this one’s self explanatory – the value of your land based on recent comparable sales in the area. 

2. Improvement value: the value of any buildings on your land, or any consented improvements made. This figure doesn’t include chattels, home improvements that didn’t require consent, or home appliances. 

3. Capital value (CV): land value, plus improvement value. This is the figure used to calculate your rates. 

A note on RVs: while ratings valuations can provide a general idea of what your property may be worth, they’re not an accurate indication. Read more about property valuations. 

Sometimes, councils have to provide services to a specific group of ratepayers. Instead of spreading the costs to all ratepayers in their region, councils sometimes charge a ‘targeted rate’. 

This is a rate that’s only charged to that specific group to cover provision of those services. Examples of targeted rates might include, water rates for those on town supply, or marketing and events for businesses in the CBD.

These will usually be listed as items on your rates invoice to help you understand what you’re paying for. 

A rates rebate is a rates bill discount available to some low income homeowners. To work out whether you’re eligible your local council will consider your income, how many dependents you have and how the amount of your rates bill. The maximum discount available is $790 – you may receive less based on your income and dependants. 

You’ll need to apply for a discount every year, it won’t apply automatically. To apply just fill out this application form and post it to your local council. 

Visit your local council website for advice on how to pay rates. Generally, you’ll receive a letter or email with an invoice, providing options for payment, which usually include online, direct debit, eftpos or credit card. 

In most cases, you can choose whether you pay annually, quarterly or monthly.