Mayoral candidates Andrew Little and Alex Baker, Labour and the Greens want to change how council rates are set.
They propose switching from the current system based on Capital Value (the value of Land and House / Improvements) to one based solely on Land Value (LV or LVR).
They claim that changing the system will reduce rates for 60% of ratepayers while increasing them for the other 40%.  Their proposal will not increase the amount of rates collected by council, just change the way it’s spread – penalising the traditional Kiwi homeowner in favour of those who want to live in apartments.
The Labour Party and Green Party proposed LVR system is not a solution to the real issue of a council that is spending ratepayers’ money like there’s no tomorrow. It does nothing to address this issue. Nor does it address a perceived issue with “land banking”.
What it does do is make rates too expensive for people who want a family home with a backyard. The LVR is a divisive tool, and will be used by politicians to force people into compact apartment living, making any property with even a hint of a backyard unaffordable in Wellington, for all but the rich.
The winners and losers
Let’s take three properties in the same street, all on the same sized 500m2 section, so with the same land value.
- A standard family home with backyard and a garage.
- A two-storey family home with granny flat underneath, backyard and garage.
- A four-storey apartment block with no outdoor space.
Under the current capital value rating system, the smaller family home’s rates would be less than the two-storey home, and they would both pay less than the apartment block. But under LVR, they would be valued the same. The apartment block would pay lower rates than before. To recover the same total rates, the family homes would need to pay more – a lot more.
Those who choose to live in the suburbs, where you have a backyard, a garden, a place for a BBQ, and the kids have a swing and can play with the family dog, will be amongst the 40% paying more – a lot more.
Why do they think this is fair?
They say that council has to provide the same infrastructure (water, sewage etc) to the apartment building as to a house, so the costs should be the same. But that is not true when you consider the extra capacity required for all the people living in a multi-apartment block compared to a single family in a small home.
LVR is not a silver bullet to fix the council’s financial woes
LVR does not address the real issues: WCC spending millions on non-core services, and a lack of focus on paying down debt. Debt has increased from $944 million in 2022 to $1.5 billion now and forecasted to be $2.1 billion by June 2026.
Any reduction in rates for the lucky 60% will be short lived, if WCC’s financial mismanagement is not fixed. As their overspending will start to drive rates up again.
Property value is set / adjusted by reviewing recent sales in an area, but there is very little bare land sold in Wellington central and the older suburbs. So how can we have confidence in how the value of LVRs are set?
The current capital value system is not broken and is superior and fairer than LVR, which is why it is widely used.  LVR is a distraction used by Labour and the Greens from the real need to stop wasteful and unaffordable spending of ratepayer’s money. We need Wellington City Council and its officers to focus on their core jobs, get back to the basics, reduce spending, focus on the infrastructure and providing core essential services that Wellingtonians need.
Do NOT vote for those trying to distract you with this LVR sleight of hand.
Vote for those who have identified the root cause – wasteful, unnecessary spending and are focused on fixing it. Only they are offering a fair and long-term solution to the problem of soaring and unaffordable rates and rent increases.
The candidates running under the Independent Together ticket and supporting Ray Chung for Mayor do not support changing to the LVR.
