Local body rate increases this year appear to be well above the rate of the increase in the CPI, creating more financial stress for homeowners, especially those on fixed incomes like many retirees dependent on NZ Superannuation (NZS).
Research commissioned by the Retirement Commission (Equitable Rates Relief Oct 20, 2023) stated that: “The literature on rates relief underscores its importance in addressing socio-economic disparities, preventing property loss and ensuring that vulnerable groups can maintain their homes and support their communities. The impact of property taxation can be particularly pronounced in New Zealand, given its unique demographic composition and historical context. In particular, the increasing rates burden for homeowners over 65 years old, who are primarily dependent on NZS with limited financial reserves, is creating pressure on these owners.”
So, how can financial pressures be reduced for retirees?
Rates Rebate
There is a NZ-wide availability to apply for a Rates Rebate, offered by the Department of Internal Affairs, and administered through local bodies throughout New Zealand. The eligibility and rules are consistent, but the maximum rebate for 2023-24 is $750 – perhaps 25% of most retired homeowner’s rates.
However, only single older people dependant on NZS are guaranteed a rebate as the threshold for income eligibility is less than the married rate of NZS. However, if a married couple fully dependant on NZS, have a 2023/4 rates bill above $3,092, they are eligible for some rebate.
A Rates Rebate calculator, application forms and general information is available online at www.govt.nz/browse/housing-and-property/getting-help-with-housing. Your application needs to be submitted no later than June 30, 2024 for a rebate in the current rating year.
While the maximum rebate is adjusted by CPI each year, it continues to fall behind the real increase in rates. For this reason, Grey Power and others are advocating that the rebate be increased annually by the Local Government Cost Index (LGCI) as this better reflects the increased prices that Local Bodies face when setting their rates.
Grey Power is advocating for a simpler application system that makes the rebate more accessible to all eligible retirees, and an increase in the income threshold to match the NZS rate for a married couple.
This would then provide much more meaningful relief to our older homeowners already struggling to meet the financial demands of property management and declining physical health. We are heartened to see that Local Government NZ (LGNZ) passed a remit at their AGM in July 2023 to also advocate to central government for similar changes to the Rates Rebate Scheme.
Rates Postponement Schemes
Around 70% of Local Bodies offer a Rates Postponement Scheme that is available “to assist ratepayers experiencing extreme financial circumstances which affect their ability to pay rates.” Only 18% of Councils offer a Rates Postponement scheme specifically for retirees, where the only qualifying requirement is that the homeowner is 65 or older and wants to postpone all, or a portion of their annual rates payments.
While many of our members will be cautious about creating any debt against their property, this is an opportunity that many will find allows them to stay within their community in a home they love, and to cope better with the increasing cost of living without having to worry about their annual escalating rates demand. While desirable for many, we do urge any considering such a scheme get good financial advice before proceeding.
The frustrating issue is that only a minority of councils have a scheme that all those over 65 can be part of should they choose. Why is there such a disparity around the country with disparate schemes and terms? We congratulate those councils who have established a simple, easily understood scheme available to all homeowner retirees 65 years of age or older with no need to provide any evidence of income and cash reserves!
Perhaps it is time to ask the local body laggards why they are not providing the services to seniors that others around the country offer. If you want to know if your council offers a Rates Postponement Scheme for seniors go to pages 12-14 of Retirement Commission research report at https://assets.retirement.govt.nz/public/Uploads/Research/2023/Duyen-Tran_TAAO_Equitable-Rates-Relief.pdf
