The concept of Separately Used or Inhabited Parts (SUIPs) of a property is an integral aspect of rating systems in New Zealand and Australia. A SUIP refers to distinct parts of a property that can be separately used or occupied, such as a second dwelling on a single property, a granny flat, or a shop within a commercial building. While the use of SUIPs in rates modelling offers flexibility and fairness, it also presents challenges that councils must navigate carefully.
The Pros of Using SUIPs
- Enhanced Fairness: SUIPs ensure that rate contributions reflect the actual use of services. For example, a property with multiple dwellings generates more waste, water use, and infrastructure wear than a single dwelling, making it reasonable for each SUIP to contribute separately.
- Revenue Accuracy: By identifying and rating SUIPs, councils can improve the accuracy of their revenue collection. This approach aligns rates with the actual demand placed on council services, creating a more equitable system for ratepayers.
- Encourages Property Utilisation: SUIPs can incentivise property owners to maximise their property’s use, as rates will reflect the economic activity or occupancy within the property.
- Legislative Compliance: SUIP-based rating systems help councils meet statutory requirements by providing a clear structure for distributing rates based on usage.
The Cons of Using SUIPs
- Administrative Complexity: Identifying and managing SUIPs can be labour-intensive. Councils need robust systems to accurately assess and maintain records of SUIPs, which can increase operational costs.
- Ratepayer Confusion: The concept of SUIPs can be difficult for some ratepayers to understand, especially when they are charged separately for multiple dwellings or uses on their property. This can lead to disputes and complaints.
- Potential for Inequities: If SUIPs are not clearly defined or consistently applied, it can create perceptions of unfairness among ratepayers. For instance, a small granny flat may face the same charge as a full-sized dwelling, leading to dissatisfaction.
- Disincentives for Development: SUIP-based charges might deter property owners from adding secondary dwellings or mixed-use developments if they perceive the rates as overly burdensome.
- Data Challenges: Keeping SUIP data accurate and up to date is an ongoing challenge. Changes to property use or occupancy can quickly render outdated records inaccurate, leading to potential revenue shortfalls or overcharges.
Striking the Right Balance
The use of SUIPs offers councils a practical way to align rates with property usage, ensuring fairness and compliance. However, councils must carefully manage the associated complexities through clear definitions, transparent communication with ratepayers, and robust systems for assessment and administration. Balancing these considerations is critical to maintaining ratepayer trust and ensuring effective service delivery.
If your council is looking to optimise its approach to SUIPs or address challenges in rates modelling, contact Ibis Information Systems today. Our expertise in designing fair, transparent, and efficient rating systems can help your council achieve its goals
