Rates Apportionment on your Settlement Statement

Why Has the Amount Owing Increased at Settlement? 

When reviewing a settlement statement, it can often be confusing to find that you're paying more than you anticipated to the vendor. This is common when the vendor has paid their rates in advance. 

There are two types of ratepayers: those who pay their rates as they go and those who pay in advance. If you are purchasing your new home from a vendor who has paid their rates in advance, you will need to reimburse them for the period during which you will occupy the property. 

How Rates Apportionment Works 

For example, if the vendor paid a full year of rates ($1,000) on 1 July 2023, and your settlement date is 6 April 2024 (280 days later), you will need to reimburse them for the 85 days during which you will occupy the property. 

Calculation: 

Yearly rates value: $1,000 ÷ 365 days = $2.73 per day 

365 days - 280 days occupied by the vendor = 85 days occupied by you 

85 days × $2.73 per day = $232.05 payable to the vendor 

The amount of $232.05 is known as the rates apportionment and will appear on the settlement statement. 

Settlement statements can contain a range of adjustments, and understanding them is key to avoiding surprises on settlement day. If you're buying or selling property and would like expert guidance throughout the process conveyancing team at Sutcliffe Matson is experienced and knowledgable when it comes to the sales and purchasing of property.

Get in touch with us today!

Hayley Motion

Email: hayley@smlaw.net.nz
Phone: 09 279 8351 ext 216

Ella Conroy

Emai: ella@smlaw.net.nz
Phone: 09 279 8351 ext 222

Rachelle Mondragon

Email: rachelle@smlaw.net.nz
Phone: 09 279 8351 ext 225