Council rates are levied for a financial year from 1 July-30 June. As a property owner you are responsible for the rates during the time you own the property. Unless that lines up perfectly with the financial year there will be an adjustment at settlement to make sure the vendor and purchaser both contribute the right amount.
In the case where you are purchasing a property, OFRM ensures that the rates issued to the current property owner are paid in full at settlement. There will be an allowance by the purchaser for the rates payable in the current rating year which we calculate on the day of settlement. The adjustment process gives you peace of mind that all property charges are paid on the day of settlement. The process differs slightly if the settlement falls in the period where the Council has not yet issued a rates notice and in that case we work out the contributions and the purchaser will pay the rates when they fall due.
When selling your property many clients are unsure if they should pay the rates leading up to settlement. I often suggest that no rate payments should be made to the water authority or the Council within 2 weeks of settlement. This is to safeguard against a ‘double up’ of rate payments on the day settlement takes place.