Overdue Council Rates

Hello All,

I am hoping that somebody can help.

My mother owns an Investment Property in QLD with overdue council rates for a few years ~$25,000 (principal + 10% interest)

She has been ill and unemployed for some time now and has fallen behind mainly for this reason.

I have offered to pay the outstanding balance. However, does anybody have any experience in negotiating with council in order to have some or all of the interest component removed from this debt?

She has called them and they were less than amenable to any form of negotiation. Threatening to sell the house etc... Any strategies to tackle this?

Thanks in advance,
Tom

 

I can understand that as she has not communicated with them about this debt for some years.

Yes, they'll do that as a last resort. Occasionally, I go to council auctions to buy these sorts of properties.

Pay the rates ASAP or get an agreed payment plan and stick to it - which is what she should have done before letting it fall into arrears for years.

Sorry I'm no help on trying to get the interest part set aside.

 

$25K means rates must have been unpaid for a bit more than “a few” years!

Usually threats to sell are a last resort. Why would the council negotiate when many previous notices must have been sent. Did your mother at any time talk to the council about her problems, or respond in any way?

Sadly, many people only pay outstanding rates when the council threatens to sell the property to recoup the debt.

I doubt you have any chance of having the debt reduced.

Probably best to pay the outstanding amount immediately before further interest charges accrue.

 

Hi all,

Since 2013 the rates have been outstanding as I understand.

This is Gympie Council. The interest they have charged is excessive and their rates are some of the highest in the country.

If they were to sell the house, they would incur fees themselves. Therefore, I am hoping for a way to settle this without incurring as much interest.

 

If they sell the house, they will take the full amount of rates owing. Then any fees will be deducted from the balance paid to your mother.

So absolutely nothing has been paid for 6 years?

The interest rate charged will be leglislated and applied to all outstanding rates. Not just your mother. It is set high to encourage people to actually pay their way, and allow for necessary public works to be funded.

Non-payers put an unfair burden on the other rate payers, so can hardly expect to receive discounts.

Just pay.

 

Councils have powers to sell and they dont need to give any notice but vacant possession may be a concern and so a sheriff may arrive with orders without notice. The council can sell the property, deduct the debt from settlement and costs to sell and write a cheque for the balance and gets whats left. The owner pays all costs. Council dont pay a thing without recovering it.

I would be ensuring mum gives your a power of attorney so council will speak to you and a suitable arrangement is made asap. Evidence of her illness is important as would an ability to make a reduction to the debt. They may remit some interest or lessen the rate etc but leaving it for years doesnt assist this. They just want the $$$ owned.

You think 10% is excessive. State laws doesnt. It is meant to look like a high rate to discourage abuse

 

Hi team,

Thanks for the replies. She is unable to pay and therefore I will be the one paying. I agree that more should have been done to not let this debt become out of hand. I didn't realise the extent of it until recently.

There is a mortgage on the property. Therefore, depending on who gets first claim, there wouldn't be enough funds to pay every creditor (given council would incur legal costs, selling costs etc...)

If anyone has any strategies to negotiate with council, I would be most grateful.

 

We often find three main agencies used as a second tier lender:
1. ATO - Taxes etc.... General Interest Charge 7.98% compounded
2. OSR - Land tax Interest varies state to state but includes a uplift penalty of 8% in NSW
3. Councils- Council rates varies state to state and possibly council to council

2 & 3 can dispose of a property is the amount is unpaid and / or take a charge on the property. ATO can initiate proceedings to enforce a debt through a variety of means including bank account garnishee without warning but are quite slow.

 

Given its been 6 years surprised the council hasnt already sold the property.

 

You might have some bargaining power if you can do a lump sum payment for the whole outstanding amount. But you might need to speak to someone higher up for that 'special arrangement' (as they will likely call it).

 

If she has no means to pay I would suggest you assist her in obtaining (free) advice on reaching a settlement and/or consider a disposal on her terms as it seems that she lacks financial capacity to retain ownership. She may be considered incapable of paying her debts. One of those strategies could include a partial change of ownership in lieu of you lending her money which may be foolish as she cant repay you either. A lawyer may assist that and advise on the issues and her will could address some options if she were to die. You would need to potentially buy out the remainder interest at that time while she retains a life tenancy.
National Debt Helpline - free financial counselling - National Debt Helpline

 

I am looking to simply settle the amount with them given that my mother has no prospect of paying the funds back (even on a payment plan, interest would still accrue.)

@Paul and thatbum - do you have any strategies to get to the 'special assistance' area - my mother spoke on the phone with them this morning and they were not at all helpful. My guess is that another person from within the council may be more helpful?

 

• Is your mum on a pension? Is she being rated appropriately & getting any pensioner discount/rebate that she may be entitled to recieve?
• If there is an issue with the billing, this can be a point for negotiation
• Use a different strategy (contact another council and find out how they treat these matters, there may be a hardships provision which she could rely on or a community liaison officer who deals with people having difficulties in the community).

 

She is not on a pension. She has worked casually on and off for years due to illness but does not earn enough to cover any repayment plan.

 

Will selling help here? Is there a mortgage, other amounts unpaid?

 

Selling would incur a small loss due to there being a mortgage etc... no need to sell at this stage, but if the council forces a sale, it will waste their resources. Hence, settling an amount seems like a logical way forward.

The way to go about this though I am not sure.

 

How is the mortgage being paid? Interest rates have fallen a lot in the last 6 years. What has been done with the decrease in payments that there wasnt 2k a year or something for council rates? Has there been no contact with the council for 6 years?

Even if you could settle the amount, what then?

 

P+I she is paying.

Was on IO before - now the extra payments required for P+I have negatively impacted cashflow for her.

The property will be sold eventually I would say. I would rather try to settle the rates first though so as not to incur a loss on any sale.

 

Read my post. It suggests a legal issue exists and you/she may want to consider this as she will need to as well (Centrelink ?) The free financial counselling seems appropriate given her financial state. I would NOT ring council yet. They may not even speak to you. It may escalate things if you make admissions on her behalf.