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Council Rate Rises

Late July 2018 the City of Boroodara issued the 2018-19 annual valuation and rate notice to property owners. Some have been shocked to see their total council rates rise upwards of 25% compared to last year.

For local residents a huge jump in their council rates puts pressure on their disposable income and they may need to reconsider their visits to the local shops. Local retailers will also feel the pressure of increased council rates, as these rates are often the responsibility of retailers through their lease agreements. Increased overhead costs can really squeeze small businesses and make operating unviable if customers will not accept the business passing on the cost through higher prices.

The significant increase in council rates for some property owners is because the assessed value of properties has been reviewed by City of Boroondara this year, this occurs every second year. Property values may have increased or decreased. The council rates are calculated on the value of property.

“A Fair Go” rates system was introduced in 2016 by the Victorian Government, which places a cap on rate increases to ease the cost of living pressures on Victorians. For 2018-19 the council rate rises have been capped at 2.25% by the Minister of Local Government. However, it must be noted that this cap applies to the “average annual increase in rates and charges” (Your Rates Explained, City of Boroondara). City of Boroondara website explains further “this means the total rate of revenue we raise can only increase by a maximum of 2.25% this year”

If the value of your property has increased by more than 15.87% then your general council rates would have increased by more than 2.25% cap. Some properties have seen the value of their properties increase by 50%, which is then a 32.41% increase in their general council rates.

Waste service charges are not covered by the Victorian Government cap. The waste service charges set by City of Boroondara have increased on average by 14.8% from last year.

Property investors, who hold much of the retail and commercial property in Glenferrie Hawthorn, will feel a flow on effect of revised property values in their land tax bills. Land Tax is based on the property values set by local councils. With large increases in property values, land tax for investors in 2019 is set to soar. Increased costs of holding property will put pressure on investment loans and leases for retailers. With such high holding costs, next year retail and commercial properties may be unloaded onto the market. Only time will tell the effects of council rate rises.

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