Rates Capping

How does rate capping work?

The Victorian Government’s rate cap system restricts how much councils can increase their average rate rise.

A council’s average rates bill must not be more than the rate cap set by the Minister in line with the Consumer Price Index.

Will my rates go up by the rate cap?

No. The rate cap does not apply to individual rates notices. The overall rate revenue collected by a council cannot exceed the current rate cap, but how much each property owner pays is determined by the value of your property.

The Victorian Government has excluded waste charges and the State’s fire services property levy from the rate cap.

Do councils get more money when property values go up?

No. All properties were revalued on 1 January, but councils do not receive extra money when property values rise. Total council rates are capped.

Some ratepayers will pay less than the rate cap and others will pay more, but the overall general rates collected by a council won't exceed the current rate cap, unless they were granted an exemption.

How are council rates set?

Each council takes the total rate revenue to be collected and divides it by the total value of all properties in its municipality to calculate the rate in the dollar.

This ensures councils do not receive more money when property values rise.

The rate in the dollar is then multiplied by the market value of each property to ensure each ratepayer contributes a fair share.

Council will add its municipal charge - if it has one - which is also included in the rate cap.

Waste charges and your fire services property levy are then added to your general rates notice to determine the total amount you will pay.