In Nelson, rates are based on land value — just the dirt, not the dwelling.
In Tasman, rates are based on capital value — land plus buildings.
Both systems aim to fairly share out the cost of council services between Nelson/Tasman residents.
So Why Have My Rates Increased When My Valuation Decreased?
Short answer: valuations themselves do NOT matter.
Valuations are just a way of deciding how to split the bill for all the services we need — roads, rubbish, parks, libraries, and more.
The total amount the council needs to collect is determined first, based on the cost of providing services. Valuations are then used to decide how this total is divided among ratepayers.
- If everyone’s valuations went DOWN by the same amount, we’d all still pay the same rates.
- If everyone’s valuations went UP by the same amount, same story — we’d all still pay the same.
Because council still needs to raise the same pot of money to keep everything running.
Think of it this way: if everyone’s property value suddenly halved, that wouldn’t mean Nelson or Tasman Council only needed half the funding, right?
Same as if all our valuations doubled. Our rates would not double.
It’s just a way to decide how to split the overall bill.
How Can Our Rates Go Up If Our Valuation Went Down?
Because it’s not really about your valuation — it’s about what council needs to collect overall.
If costs for services go up (and let’s be honest — they have!), then rates need to rise to match. Everyone pays a bit more.
How much more depends on how your property value has changed compared to everyone else’s. It’s all about comparisons. If your value didn’t drop as much as most others, your slice of the bill gets a bit bigger. If your value dropped more than most, you might end up paying a bit less.
So Why Do We Use ‘Valuations’ to Set Rates?
Because we have to use something — and value is a handy (if imperfect) indication of ‘wealth’.
If your property is worth twice mine, it seems fair that you’d pay a bit more. If it’s worth ten times more, then probably a lot more. Which also seems fair.
The fact that Nelson uses land value, and Tasman uses capital value is an indication that no system is ‘perfect’.
We could split rates equally between everyone, but that would mean someone in a $600k home pays the same as someone in a $6 million home. Doesn’t seem fair.
We could base it on income, but then someone with a flash house and lots of assets but no job would pay nothing at all.
We could use number of cars owned, number of pets, number of children, or how many pairs of shoes you own. 😉 But those all have flaws too of course.
So: value it is. Not perfect, but a fairly decent way of doing things.
Just remember — the total amount needed doesn’t change when valuations change. Valuations just determine how we all share the overall bill.
Water Charges: A Separate Bucket
Water charges are separate and not based on property or land value. If you’re connected to the council’s water supply, you’ll pay a fixed fee plus usage charges. The fairness here comes from the ‘charge per use’. The more you use the more you pay.
If you’re on a private supply, like a bore or rainwater tank, you won’t pay any council water rates — because you’re not using their system.
One Last Thing
Rates are a little more complex than just a valuation. There are some fixed elements to rates bills, such as the recent Storm Recovery Charges. But the main ‘general’ component works as explained here.
If your valuation does seem way off compared to others in your area though, you can object through the official process. This is explained when you receive your ratings valuation notice from QV.
There is a fair amount of misunderstanding of how valuations affect your rates bill. Hopefully this clears things up a bit. It is on the whole a fair system simply dividing up the pot that needs to be paid.
We’re all in this together, chipping in our share to keep services going.
Your Questions on Rates:
Q: Does council get more money if property values rise?
Nope. The total amount they need to collect is worked out first. Property values just decide who pays what share of that.
Q: Can I pay less if my value goes down?
Only if your valuation dropped a lot more than others. It’s all relative. It’s not the actual valuation that matters for rates — it’s the valuation compared to everyone else in either Nelson or Tasman.