So, you're buying a property soon - good for you!

You've considered extra financial details including your initial deposit, body corp fees, and the strong possibility of extra cash rate changes, which we applaud.

But have you allowed for the cost of council rates?

Let's take a look at what to expect.

What are council rates?

Council rates are property taxes that every Aussie homeowner must regularly pay to their home's local council.

Making up about 3.6% of taxes received by all levels of government and about 50% of local council income, council rates vary widely depending on where your home is situated.

Why do I need to pay council rates?

Aah, this is one we've all asked ourselves at one time or more!

The reason rates exist is to help councils maintain and improve local community services and facilities - above and below ground.

Think parklands, libraries, and sports ovals; roads and footpaths; and details you rarely even think of, or see, such as waste collection.

Ideally, council rates mean every homeowner in a municipality is doing their bit to keep their local public and community services smart and serviceable.

How are council rates calculated?

Another major question for new homebuyers - and as usual with major questions, it's not an easy one to answer as everything depends on where your home is located.

Generally, council rates are based on your home's land valuation, or rateable value, multiplied by a dollar rate determined by your council.

Homebuyers unsure about how much they'll pay - but keen to prepare for this cost before purchasing - should check this point on their local council's website, with many of them including rate calculators.

NB: council rates are also often divided up into several components.

In Victoria, for example, rates include different sections for that of basic municipal details, waste management, and the rate in the dollar.

How often do I need to pay council rates?

Usually, you'll pay rates every quarter or every year.

Alternatively, you may be able to organise a monthly rate, or pay your rates in advance of their due date.

Again, it depends on where your home is located.

Can I receive a concession for council rates?

Yes, you can, if you're a pensioner or on a health care card or similar.

For example, pensioners in Queensland receive a 20% subsidy on their gross rates and charges, while those in NSW are entitled to up to a $250 rebate on rates and charges, with extra rebates allowed for water and sewerage costs. 

Similar rates concessions are available in other states and territories too.

What happens if I don't pay council rates?

In short, council rates are state legislation and must be paid; otherwise, your local council is entitled to fine you or take other action to recover their rates - and yes, we're talking about possibly taking you to court, or even taking your home.

"If rates remain unpaid on occupied land for more than three years, council can sell the land," the Queensland Ombudsman's website says.

If it helps, no one enjoys paying council rates and you do have chances to submit rates complaints to your local council.

What happens if I can't pay council rates?

On the other hand, perhaps you're going through a financially tough period, and simply need some extra time to pay your next round of rates.

As with issues paying utility bills and mortgages, it's best to contact your local council ASAP if you're in this position.

"Local councils can enter into payment arrangements with people having difficulty paying rates," says the Queensland Ombudsman site. 

"Make it clear why you are unable to pay and discuss what arrangements are available."

The City of Sydney's website concurs, adding that homeowners "may be eligible for a financial hardship determination".

We're here to help

Whatever home loan road you wish to take, we’d love to help you travel it!

We can find you the best home loans from more than 40 of Australia’s biggest banks and specialist lenders and we can also help you refinance your loan to help you keep more money in your pocket.

So, give us a call today at Lending Loop.