Rates and rating values
Find out about our rating system and how to understand your rating value.
Check the latest value for your property
We've changed the way we calculate rates
The way we calculate rates changed on 1 July 2024. Palmerston North’s rates have moved to a system based on both land value and capital value. This will be phased in over 3 years.
Changing the rating system doesn't change the total rates revenue Council receives. The amount needed to run our city’s services and facilities each year is decided when setting the annual budget for that year. Changing the rating system may change the share or portion of the rates paid by individual ratepayers.
Other parts of our rating system remain, such as fixed charges for services like water, wastewater and recycling.
Another change we’ve made is that the previous 37% discount to the general rate for rural ratepayers has reduced to 30% (July 2024 to June 2025). It will reduce to 25% next year (July 2025 to June 2026).
The first instalment of rates based on the new system was sent to ratepayers in August 2024.
These changes have been made to achieve a better balance
The main reason for these changes is to recognise that rates are a tax, so should reflect ability to pay. This means capital value should be part of the calculation.
However, to also support efficient use of the city’s land, part of the rates should continue to be based on land value.
We are staging the change over 3 years to provide time to adjust, particularly for those whose capital value is very high compared with their land value.
The transition will happen over the next 3 years
For 2024/25, around 16.5% of your general rates will be based on capital value. This is proposed to double to around 33% in 2025/26 and rise to 50% in the 2026/27 financial year. This excludes the portion of your rates based on fixed charges.
The calculation of your rates for 2025/26 and beyond will also be based on your property's new rateable value. This will be determined by independent valuers QV as at 1 September 2024. You should receive your new valuation in December this year.
We made these changes after consulting with our community
In April 2024, we asked you for feedback on 3 different rating options as part of our long-term plan consultation. These included continuing to base our general rates on land value, making a change to fully basing the general rate on capital value, or adopting a model that uses both land value and capital value (which was our preferred option).
In response to your submissions, our elected members decided to adopt the mixed model and base a greater portion than we initially proposed on a property’s capital value (ie, 50% of the general rate rather than 30%) and to spread the change over 3 years.
Understanding your rating value
Rating values and their effect on the rates you pay is a common topic of interest. How rating values are calculated and their impact on rates is a complex process which differs between councils. The rating valuation process used in New Zealand is an efficient method of determining many property values for allocating rates.
What is a rating value?
A rating value is assigned to every property in New Zealand, and is made up of:
- Capital value: the likely price a property would sell for at the time of the revaluation. The capital value does not include chattels.
- Land value: the likely price the land would sell for at the time of the revaluation.
- The value of improvements: the difference between the capital value and land value, reflecting the value which buildings and improvements add to the bare land.
Who determines your rating value?
Palmerston North City Council contracts Quotable Value (QV) for valuation services.
How are rating values calculated?
Rating values are calculated using a complex process called mass-appraisal. Valuers consider all relevant property sales which occurred in an area around the date of the latest valuation. A market trend is established and applied to similar properties in the area.
Several assessments of individual properties are completed every year because of issued building consents, subdivisions, sales inspections, objections and ratepayers' requests to update their rating value. These individual assessments supplement the mass-appraisal process.
The process of calculating rating values is independently audited by the Office of the Valuer General. Strict quality standards must be met before a revaluation is confirmed.
When are rating values calculated?
An important aspect of a rating value is its effective date, which is the date of the citywide revaluation.
The rating value of a property depicts its value at the effective date, and it's updated every three years.
The effective date of the latest Palmerston North revaluation is 1 September 2021.
If you don't look inside my house, how do you know what it is worth?
QV uses the details it stores on every property. When rating values are calculated, a market trend is established from similar properties which have recently sold and applied to the properties in the group.
Similar properties have similar attributes, like land and floor area, building age, and the property condition and location.
Properties are inspected throughout the year to make sure their details are updated where changes have occurred (as notified on a building consent).
How can my house have a rating value if it wasn't built at the time of valuation?
Houses that have been newly built or renovated since the last valuation receive an updated rating value that reflects what it would have been worth if it existed at the effective date.
As rating values are used to apportion rates for up to three years, this keeps all property values comparable, enabling Council to allocate rates accordingly.
Why is the change in my rating value different from the changes in property values I hear in the media?
The different numbers are explained by different time periods being reported on.
We revalue our properties every three years. Any change in rating value is compared with the last revaluation, three years ago, whereas most media coverage refers to changes in property values over the last 12 months.
If my property value increases, will my rates go up?
Not necessarily. Your rating value is expressed as a share of the total value of all properties in the city so we can apportion the rates.
If all rating values increase by the same percentage, your share remains the same, and so do your rates. Of course, this is assuming that the city's expenditure stays the same.
For the 2021 revaluation the increase in land values varied throughout the city. Also, residential land values increased by a larger percentage than commercial or rural land values.
If Council expenditure rises, your rates could rise irrespective of changes to your rating value, because the cost is apportioned across the city.
What is the difference between a rating value and a current market valuation?
Rating values exist to apportion rates and are determined at the effective date for each Council.
Market valuations can be independently acquired at any time. They involve an extensive interior and exterior inspection as well as an assessment of comparable sales to accurately depict an individual property value in a comprehensive report.
The valuer will use their expertise and analyse recent sales data to arrive at a figure which is current at the date they issue the report.