Hip pocket squeeze: Rates are set to soar as councils factor in rental rates, which have jumped since COVID

WA’s surging rental market is poised to trigger a fresh hip pocket calamity, with council rates set to jump for homeowners. Calculations for local government rates are based on gross rental values, which have gone through the roof since COVID. WA’s Valuer General estimates rental values every three years. The most recent revision, which comes into effect in Perth on July 1 next year, encompasses the rent-frenzy period between 2021 and 2024. Data from property analysts Cotality shows most metropolitan suburbs were fetching at least a third more in rent last year compared with 2021. Battler suburbs have experienced a disproportionate jump in rental values, with Westminster (48.7 per cent), Balga (50.4 per cent), Armadale (47.6 per cent) and Koondoola (45.5 per cent) among the biggest lifters. Councils have vowed to do their best to limit any increase and have pointed out that rental value is not the sole determinant of what a property’s rates will be. But there is no dispute that elevated rental values will place pressure on them to lift the final figure, which will be revealed next year. “I would hope the Minister for Local Government would investigate this issue given the cost-of-living pressures,” said WA Council of Social Services boss Louise Giolitto. “It will be compounding the problems experienced by those people on lower incomes. If needed, there should be some level of intervention.” Ms Giolitto urged a rethink of how rates were paid, saying people who paid quarterly were penalised with higher fees compared with those who settled their bill up front. WA Local Government Minister Hannah Beazley said councils had to balance keeping rates low with “long-term financial sustainability to ensure they can deliver the services their communities need into the future”. “While local councils are responsible for setting their own rates, I would encourage them to keep cost of living pressures of ratepayers top of mind when it comes to setting rates,” she said. Ms Beazley said she would expect councils to voluntarily forgo the opportunity for windfall., should the revaluation mean they collect more rates than needed. Shadow Local Government Minister Kirrilee Warr said any sharp increases in rates “should not come as a surprise to the State Government”. “While the formula to determine rates is complex, and the Valuer General’s calculations form only one part of the process, there is no doubt that the skyrocketing rents and property prices WA has seen since 2022 will push rates higher for many households,” Ms Warr said. “Local governments are acutely aware of the impact on households and are trying to provide support where they can. But councils are also under significant financial pressure. “At the same time, critical funding programs, like the Country Local Government Fund. . . have effectively dried up, leaving councils will fewer supports. “These increases are a direct consequence of Labor’s inaction on the housing crisis and its neglect of funding, which helped to make local governments sustainable, and it’s WA families who will be hit directly in the hip pocket.”