Homeowners owe almost $6m in rates

BY EVAN HARDING AND SHANE COWLISHAW

Southern homeowners owe almost $6 million in overdue rates, and the figure is likely to rise in coming months, a budgeting boss warns.

The latest figures available show $5.73 million in overdue rates are owed to the Invercargill City Council, and the Queenstown Lakes, Southland, Gore, Central Otago and Clutha district councils.

Invercargill City Council finance director Dean Johnston said 416 of its ratepayers owed more than $478,500 of that money.

The city's Jubilee Budget Advisory Service manager Simon Tierney said increasing numbers of homeowners were asking for budgeting advice at a time when interest rates were low, suggesting trouble to come.

"People haven't got enough money now to pay their bills. What's it going to be like when the mortgage (interest) rates go up ... the problem is only going to get worse," Mr Tierney said.

BNZ chief economist Tony Alexander has said interest rates were set to rise as the year progressed.

Mr Tierney said it was also inevitable that rates hikes would be imposed on homeowners this year, exacerbating the problem.

Those struggling to meet rates payments invariably owed money to other creditors, often because they were living beyond their means, he said. The best way to deal with debt was to communicate with creditors and work out a realistic payment plan, Mr Tierney said.

Mr Johnston said the Invercargill City Council had been owed $740,000 in unpaid rates in November, which was consistent with other years.

But after requesting the unpaid debt from mortgage holders (banks) in November, as it was entitled to do under the Rating Act, $262,000 of the unpaid rates money had been paid back.

It is understood when the council requested the money from the banks, the banks put pressure on the ratepayers to pay up.

Mr Johnston said the Rating Act gave the city council many options to collect outstanding rates bills, but it preferred to work with ratepayers and come up with payment plans they could afford.

Of the six southern councils, Queenstown Lakes is owed the most in unpaid rates, $2.75 million, while Gore is owed the least – $126,000.

Queenstown Lakes District Council finance general manager Stewart Burns said it had put in a concerted effort to collect unpaid rates money during the past 18 months, since payments started slowing. "There's more people who are obviously struggling," he said.

Clutha District Council corporate services manager Alan Dickson said going to the mortgagee holder (bank) to collect outstanding rates was a final option, but the council also employed private debt collectors to recover overdue rates.

There had been an upward trend in people not paying their rates last year, which he attributed to the economic climate.

THE CHEQUE'S IN THE MAIL

Invercargill City Council: As at January 31 – $478,500

Central Otago District Council: As at January 31 – $189,000

Gore District Council: As at December 31 – $126,000

Queenstown Lakes District Council: As at December 31 – $2.75 million

Clutha District Council: As at June 30 – $789,000

Southland District Council: As at June 30 – $1.4 million.

- © Fairfax NZ News