Cairns Council Rates – are they mad?

i viewed a commercial property in Wollongong where 20% of rent was needed to pay the rates.

"They" say don't invest in Tourism towns, don't invest in mining towns, don't invest in regional towns, don't invest in inner city apartments……and the list goes on……..at the end of the day – do as much research as you can, try to make the most informed decision you can, and then back your decision. If you feel the risk is higher in a location but still want to invest there, make sure you've diversified so if it does hit the fan there, you don't lose your whole cart.

Back on topic though – it's definitely the services portion of the rates bill that is causing the increase in Cairns. Many areas of Cairns are suffering reductions in the unimproved land values over the last few years – so if the rates were based on that alone we should see rates reducing, and that definitely aint happening.

Maybe double digits is a slight exaggeration

Brisbane's average residential rates bill will rise 3.8 per cent under Brisbane City Council's 2013-14 budget, lifting it by 88 cents a week or $45.60 a year.

The increase is lower than last year's 4.5 per cent rise but above Brisbane's consumer price index, measured at 2.1 per cent in the March 2013 quarter. 

In saying this it never amazes me to see certain well know Buyers Agents putting clients into Cairns where the Council Rates take up 20%.

We place a lot of clients into residential investment properties thru our Buyers Agency arm and are very particular about the sort of property we put clients into.

High Body Corporate fees or excessive Council Rates need to factored in.

Course for some agents / investment advisers that is the last thing they look at as the investment doesn't look so attractive on paper if they mention that.

Cheers

Yours in Finance

Depends, Melton shire council increased rates by a total of 12.9% (9.3% increase in Waste and 3.3 on normal rates)… Double digits

Murrunidi council increased by 8%

Pallara at 7.58 per cent (QLD)

Bayside 5.5%

Monash (VIC) 6% increase on rates and 2.5% increase on waste

Geelong 4.4

North Sydney Council Rates  increase. by 12.34% –

It does happen

Excuse me for being late to this thread but having some knowledge of the Cairns rating structure there would appear to be a good deal of misinformation. Cairns rates are not unusual and typically in line with most Queensland cities. Rates in Cairns have increased by about 4 %– 5% p.a. in recent years which again is probably typical and not unusual.

“I have an IP in Cairns and have just received my Council rates notice. It appears to be 2.3% of the worth of the IP. Is this right?”

“Am I missing something?”

Most residential units in Cairns pay the minimum general rate which was $788 p.a. in FY 2013. My guess is we are talking about a cheaper unit with 2.3% implying a value of about $90K. Cheaper units in a sense are disadvantaged by the minimum rate structure and by paying an equivalent amount for such as garbage and sewerage servics as larger houses. Again this applies in almost all Qld councils.

“I have. All of them. They still haven't indicated on what basis (and why) they've calculated the rates the way that they have. Absolutely appalling!”

For a residential unit your rates notice will include “General Residential K”. Next to that is a number. That number is the site land value attributed to your unit on which the general rate is calculated IF it exceeds the minimum rate.

Note that for a strata unit the valuation will be the site land valuation for the entire block split between units according to the body corporate schedule. If you think your valuation is anomalous the first thing you should check is the strata schedule.  The valuation comes from the Qld Valuer-General which all councils are required to use for general rates.

Additional service charges are Water Access $232 p.a; Sewage $696 p.a; Garbage $333 p.a. This results in a total minimum rate of $2,051 p.a. This is comparable with other Qld councils and lower than the rates on an equivalent unit in Townsville. There was also a state fire levy on the rates notice. Also note that Cairns is among the few larger Qld councils that do not charge higher general rates for IP than for PPOR.

The Cairns economy is now recovering quite well after a rough patch post GFC and is more diversified than some imagine. Cairns Council has among the lowest relative debt levels in Qld and management efficiency is comparable with other councils. Valuations for unit land have fallen and units paying above the minimum rate have experienced a fall in general rates.

In short, your rates are comparable with other Qld centres and not anomalous at all. The apparently high proportion is likely a function of the minimum rate structure and a currently low property valuation. Rental vacancy rates in Cairns are now quite low and cheaper units also generally achieve high gross yields.

Well spotted Freckle!