A (rates owing) tale of two cities

Monday, 3 November 2025

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A Wellington ratepayer who owes thousands of dollars in overdue rates is facing a forced mortgage payment despite offering to pay the amount back in instalments.

Mehrdad Fatemi is one of 7825 Wellington ratepayers, or 9.3%, in arrears as of September 30. They owe a total of $39 million.

Of those, 5500 had mortgages, with about 2158 having outstanding bills from previous years. The remaining 3342 mortgaged ratepayers had fallen behind on their current year’s rates. Legally, that money could only be recovered after October 31 next year - if the accounts remain unsettled.

Fatemi, an IT consultant, owns three properties in Wellington and Upper Hutt, including two rentals. After a contract ended in July 2024 he was out of work for almost a year.

He now owes between $7000 and $10,000 in unpaid rates on the properties.

“I tapped into savings, I had all the mortgages to cover off … I could only could cover certain things so I left the rates until later.”

Vacant rental properties ‒ one group of tenants left for Australia ‒ added to his stress.

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Once back in work Fatemi approached both Upper Hutt and Wellington City councils asking for a payment plan, saying he didn’t have the means to pay what he owed “all in one go”.

What happened next, he says, raised questions about fairness and consistency in how councils treated ratepayers facing hardship.

“Upper Hutt City Council responded immediately, setting up a direct debit plan that covered arrears and current rates, and they placed my account on a ‘no penalty’ status as long as payments continued. It was a humane and practical solution.

“Wellington City Council, by contrast, took more than two weeks to respond and then refused any payment plan for the overdue amount. Instead, they issued a 10% penalty, threatened to contact my bank to recover the debt, and said they could only discuss a payment plan after I paid the arrears in full.

“I don’t understand it to be honest. I mean in a normal world if you’re a CFO or finance manager, you never say no to someone wanting to give you money.”

Fatemi said it was the first time he had fallen behind in paying his rates in the 15 years he had owned property.

Compared with Upper Hutt, Wellington’s system of punishing defaulters was rigid and inflexible and failed to account for temporary setbacks like his job loss, he said.

He was now working with his bank to come up with a compromise, but was worried any transfer of debt to his mortgage would incur additional interest charges from the bank.

A clause of the Local Government Rating Act 2002 allows councils to force banks to pay rates and add the money to a mortgage if a ratepayer hasn’t made a full payment or set up a pay arrangement within 90 days of a first notice.

Though only initiated as a last resort ‒ when all other methods of getting rates paid have been exhausted ‒ it is being used thousands of times every year across the country.

Andrea Reeves, Wellington City Council’s chief strategy and finance officer, said it was unable to initiate a direct debit when a rates account was in arrears, but could do so for future rates once the arrears had been paid.

A 10% late payment penalty was applied to all accounts without an active payment arrangement or direct debit in place.

“This is part of our standard credit control process and not a reflection of individual circumstances. We do have a remission policy in place for ratepayers with a good payment history or one-off setbacks. However, if a payment plan has not been honoured and penalties are charged, these would not normally be remitted.”

In the quarter to the end of this month the council had 399 payment arrangements in place, totalling $1.55 million. Of those, 260, totalling $1.19m, related to rates accounts with mortgages and 139 ($367,500.86) related to unsecured debt.

Reeves said anyone facing financial difficulty should reach out “so we can work together on a plan that suits their situation”.

A spokesperson for Upper Hutt City Council confirmed it did not require rates to be paid in full before setting up a direct debit.

“We work with ratepayers to establish an arrangement that covers both arrears and ongoing rates as they are due.”

They encouraged ratepayers to spread payments over the rating year to make them more manageable.

It was yet to complete October reporting, so didn’t have up-to-date figures on the number of ratepayers currently in arrears.

However, as a comparison 2.98% of Christchurch ratepayers were in arrears, and in Auckland 6.6% of ratepayers had overdue amounts as at the start of the 2025/2026 year.

Average house valuations in the capital fell by 24% this year, compared with 2021, the last time valuations were done. Rates, meanwhile went up an average 10.8% and are set to rise another 13.1% next year.