Merri-bek City Council mulls radical plan to spike rates for landlords

Landlords with properties in Melbourne’s north would pay almost double in council rates under a proposal to slash bills for local residents and business owners struggling with the cost-of-living crisis.

Under a radical proposal investors who rent out a property in the City of Merri-bek would pay almost double in council rates. Picture: David Caird

Landlords with properties in Melbourne’s north would see their council rates bill skyrocket under a radical proposal to slash the bills for residents and business owners struggling with the cost-of-living crisis.

Merri-bek City Council will on Wednesday night consider a motion put forward by former Greens and now independent councillor James Conlan to explore the dramatic change to the council’s rates system.

Under Mr Conlan’s proposal, investors who lease out a residential property in the City of Merri-bek would pay almost double in council rates, while owner-occupiers – who live in a property they either own or pay a mortgage on – and local businesses would pay half.

The Herald Sun understands that, if implemented, the council would be the first in the state to roll out a change of this kind.

The motion requests that the council investigate if a “differential rate” for residential property investors would be possible.

Merri-bek City Council will consider a motion put forward by independent councillor James Conlan to explore a change to the council’s rates system. Picture: Merri-bek City Council

Mr Conlan said this was an opportunity for the council to “show leadership” by seeing whether it could deliver cost-of-living relief to local residents and businesses with a differential rate.

“My motion proposes that council explore charging higher rates, ideally double, to property investors in Merri-bek, while charging lower rates, ideally half, for owner-occupiers and local businesses,” he told the Herald Sun.

“The change would make it less attractive to be a property investor in Merri-bek. More investors would sell their investment properties because of the higher rates, which would free up more homes for first home buyers.

“Property investors are already fleeing Victoria due to higher land taxes. My proposal would have a similar impact in Merri-bek. Less property investors in Merri-bek would be a great outcome. Hopefully other councils follow suit.”

The average rates bill for a home in the City of Merri-bek is $1800 per year and about $2700 for non-residential properties. Picture: Supplied

The average rates bill for a home in the City of Merri-bek is $1800 per year and about $2700 for non-residential properties like shops, warehouses and industrial sites.

This means that under the proposal:

Owner-occupiers would only have to pay an average of $900 per household per year in a major saving for those under mortgage stress;

Investors who lease out a property in the municipality would have to fork out an average of $3,600 – four times the amount of an owner-occupier – per property; and

Investors with two properties in the municipality – who live in one and lease out the other – would have their high rates bill offset by their discount for being an owner-occupier.

However, a council officer, whose comments were included in the motion, said raising rates on investment properties may not even be allowed under legislation.

“It is very unlikely that it is feasible to apply a differential rate for property investors who have more than one residential property in Merri-bek, given the legislative framework and guidelines that apply to local government,” the council officer wrote.

Under its current rates system, the council applies “uniform rating” across all properties.

“Uniform rating ensures all ratepayer groups are treated equally, as differential rating may be seen as unfair and excessive towards certain ratepayer groups,” they wrote.

Dean Hurlston, president of ratepayer advocacy group Council Watch, says the motion is ‘garbage’. Picture: Kiel Egging

Dean Hurlston, president of ratepayer advocacy group Council Watch, said Mr Conlan was “grandstanding”, describing the motion as “garbage”.

“Officers state this would probably not be legally possible yet he continues to waste everyone’s time,” he said.

“He makes an absolute joke of the council and staff.”

However, rental advocate Jordan van den Berg, also known by the moniker Purple Pingers, threw his support behind the idea, imploring the council to “do the right thing”.

“There is little discussion on the role of local councils when it comes to the housing crisis but they have such a huge role to play, particularly when faced with federal and state governments doing sweet f--k all about it,” he posted to X.

The Herald Sun understands that a number of councillors will support the motion, however it is unclear whether it will pass with a majority.

Mr Conlan said most of his fellow councillors supported lower rates.

“My proposal would reduce rates for local ratepayers by up to half,” he said.

“I can’t see why they wouldn’t support it.”

If passed, council officers will prepare advice as to whether differential rates on residential investment properties is possible and, if so, what the potential risks and consequences would be.

Mr Conlan last week put forward a motion to ban police from using council facilities for the purposes of hosting events, but it was swiftly blocked by the chief executive.