Local councils need to generate revenue in order to run smoothly and to offer us various services that they eventually do. As an instance, for the year 2014-15, City of Melbourne requires something like $399 million.
Now, where does it get this kind of money from? A large part of it comes from rates. In case of Melbourne, as much as $226.5 million is expected to come via rates.
What are rates?
So, this naturally brings the next question to the fore — what purpose is fulfilled by serving a home rates notice? Your council serves you a rates notice that has certain figures on it. These figures can refer to your site’s value, the net annual value of your home, your gross rental value, and the capital improved value, just as well.
These different values just mean that the councils use different methodologies to calculate how much property owners owe the council for their particular share of local services.
How are rates calculated in NSW?
In NSW, land values are given maximum emphasis to figure out the home rate. The calculations are based either entirely on land values or the cumulative figure arrived at by adding land value to a pre-stipulated amount per property.
Other methods of calculating rates
Similarly, there are methods like the Capital Value of the Land which is the result of the land value and any capital improvements (building) made to the land. There is the Net Annual Value which utilises the yearly rental value of a property — suited for councils which cater to a large volume of rental properties.
These are important figures to keep in mind, and as a conscientious citizen, you must always be aware about them. As an important aside, it also gives a marginal idea of your property’s worth.
What different numbers do you see on your rates notice?
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