The Government has confirmed plans to cap council rates at 4%.
Under the proposed system, first mooted late last year, annual rates increases would remain within an initial target range of 2% to 4%.
This range will be reviewed every six years and updated "where necessary to reflect costs outside councils' control".
The target range would include a minimum rate increase to cover the costs of delivering their services and investing in infrastructure.
Watch Local Government Minister Simon Watts make the announcement here.
Exemptions would be available in exceptional circumstances, such as natural disasters, or when councils can "demonstrate prudent financial management and a justified need to operate above or below the target range".
The scheme excludes water services and will continue to be regulated separately.
An independent regulator will also be established.
Councils will need to consider the target range from July 1, 2027, with the caps expected to take full effect from July 1, 2029.
Under the proposed system, annual rates increases would remain within an initial target range of 2% to 4%. (Source: 1News)
Local Government Minister Simon Watts said the cap was a response to "steep and unexpected" rates increases.
“Ratepayers nationwide have been hit with median increases of 14.2% and 9.2% over the past two years, respectively.
“This rates cap is about driving greater fiscal discipline, keeping rates affordable, and ensuring councils are focused on delivering the services ratepayers rely on.”
He said they were "adding pressure to household budgets at a time many New Zealanders are already feeling the squeeze”.
“Our Government is focused on easing cost-of-living pressures and getting councils back to basics.
“It will also sharpen the focus on delivering the services communities expect councils to get right, like fixing the potholes, collecting rubbish and running our pools and parks."
Meanwhile, cash-strapped councils are welcoming a long-term funding option from the Government to deal with infrastructure challenges. (Source: 1News)
He said the Government recognised there would be circumstances when councils needed greater flexibility.
"Exemptions will not be granted lightly and will only be available in exceptional circumstances where there is strong justification."
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