Thousands of New Zealand Households Struggle with Council Rate Arrears

Tens of thousands of households in New Zealand are facing difficulties with council rate payments, with significant arrears reported across the country. According to recent data from Stats NZ, council rates increased by 8.8 percent year-on-year during the September quarter, a notable rise although lower than last year’s 12.2 percent. The average increase from 2018 to 2025 had been around 7.3 percent, highlighting the growing financial burden on residents.

In Auckland, the situation is particularly pressing. As of the start of the 2025/2026 financial year, approximately 42,902 households, or 6.6 percent of ratepayers, were in arrears. Rhonwen Heath, head of rates, valuations, and data management at Auckland Council, noted, “For the previous two years, 5.4 percent of rates were unpaid. Four years ago in 2022/2023, 8.2 percent of rates were outstanding.” The council actively engages with residents through reminder letters, follow-up calls, and emails to help them catch up on their payments.

Wellington City Council also reported a concerning trend, with 7,825 ratepayers in arrears at the end of September, representing 9.3 percent of its ratepayers. These households collectively owe $39 million. This is a slight increase from the 7,302 ratepayers, or 9.05 percent, in arrears in 2021. In Christchurch, the rate of properties with outstanding rates is slightly lower, currently at 2.98 percent, compared to 3 percent in 2021.

The rise in arrears is attributed to multiple factors, including increasing living costs and rising interest rates. David Verry, a financial mentor at North Harbour Budgeting Services, explained that before the COVID-19 pandemic, his organization rarely encountered clients with mortgages. However, as interest rates have climbed, more households are struggling with substantial home loan debt. “While they were struggling to meet the fortnightly repayments, alongside all the other expenses, it was things like the rates bill that tipped them completely over the edge,” he stated.

Verry further emphasized that the increase in rates has outpaced inflation, placing additional strain on households. “Where there haven’t been commensurate increases in incomes, rate increases will tip people over the edge when budgets are tight,” he added. He noted that some councils have resorted to actions under the Property Law Act, forcing banks to pay rates and adding the amount to mortgages.

Research from Massey University, led by Associate Professor Claire Matthews, indicates that rates are becoming an escalating concern for retired households. Some rate arrears may represent a protest against council decisions, while others are due to genuine financial hardship.

Jake Lilley, spokesperson for Fincap, a network supporting financial mentors, pointed out that those on fixed incomes particularly struggle with rising rates and power costs. “The numbers in our Voices reports continue to show more homeowners presenting for assistance with financial mentors each year,” he remarked. Between 2021 and 2024, there has been a 38.7 percent increase in the proportion of debt listings where local government is the creditor. Despite this, the median amount of these debts has decreased to $1,098 between 2023 and 2024.

The data collected by Fincap encompasses various local government debts, including dog registrations and parking infringements, alongside rates. Financial mentors have expressed concerns over the lack of clarity and inconsistencies among different councils, complicating the process for residents dealing with debt. Recommendations have been made to include local government debt in the broader government debt framework and to implement effective hardship support policies at councils.

As New Zealand grapples with rising council rates and the accompanying financial strain on households, the need for effective support and clear communication from local councils has never been more crucial.