The Government has officially announced plans to introduce a national rates cap, designed to help councils rein in rising operating costs and create a more disciplined, sustainable funding environment for growth.
With rates increasing sharply in many regions, the cap signals a shift toward improving long-term affordability for housing and commercial development and providing greater certainty for investors and the property sector.
Under the proposed model, annual rates increases will be limited to 2–4% per capita, per year:
- 2% → the lower threshold to maintain essential council services
- 4% → the upper limit, aligned with inflation and GDP trends
The cap applies across general rates and targeted rates but excludes water charges and non-rates revenue.
Councils wanting to exceed the cap will need approval from a new central government regulator. Approval will only be granted in exceptional circumstances (e.g., natural disasters or critical underinvestment), and councils must show how they will return to the target range over time.
Legislation is expected in 2026 and to be passed by 2027. From there, monitoring will begin as councils are encouraged to incorporate cap settings into Long-Term Plans and report on financial performance. The full regulatory model and implementation is expected in 2029.
Whilst the rating cap looks promising, we know the impact on differentials and New Zealand’s infrastructure deficit will need to be closely considered. With the introduction of development levies, targeted rates and IFF funding mechanisms, local government financial transparency and accountability is more important than ever.
If you have any questions or concerns as Property Council looks to engage with the Government on rating caps, please contact Bella Leddy.
Author | Bella Leddy
As an Advocacy Advisor, Bella supports the development of policy and advocacy initiatives that reflect the real-world experience of our members.
With a Bachelor of Laws and Politics from Otago University and previous experience as a policy intern at the Department of Internal Affairs, Bella brings both a sharp analytical mind and a genuine passion for public policy. She’s particularly energised by engaging with members to ensure our advocacy is grounded in industry insight and practical solutions.
Extroverted, thoughtful and service-focused, Bella thrives in roles that connect people and ideas. Outside the office, she channels her energy into teaching group fitness classes – including yoga, pilates and spin – and is always up for a good political yarn.
