Perth rate carrots set to go
Rate rises: Inner city living has become popular. Picture: Sharon Smith/The West Australian

Rate incentives to encourage inner-city living may soon be a thing of the past in the City of Perth.

Perth is considering increasing residential rates to bring them closer to other metropolitan councils and looks set to do away with a rate rebate brought in to encourage people to live in the city.

Council last night agreed to advertise a proposed average 4.9 per cent rate increase - 2 per cent above the estimated rate of inflation - for 2014-15.

The Increase, which has yet to be approved, is being driven by a number of factors including a fall in the rate base growth of the city and an increase in the number of people seeking rate exemptions.

In the case of residential rates, the city is looking at gradually reducing historic subsidies established to encourage residential development.

According to last night's report to council, the city's existing residential rate of 4.131¢ in the dollar is between 22 per cent and 63 per cent lower than most of the nearby councils.

The report to council also made reference to the inner city living scheme rebate, which was introduced in 1999-2000 and offered three-year incentives to buyers of newly developed residential properties.

The rebate was flagged last year for phasing out at the end of 2014-15.

The report said the rebate "can be considered to have achieved its objective of more residential properties being established within the city centre".

Perth Mayor Lisa Scaffidi said the city's residential rates were historically low to correct the declining rate of inner-city living and the strategy had worked.

"In the past decade Perth has had the highest rate of residential growth of all the capital cities," she said.

Asked if she was confident the rate rebate had achieved its objective and was no longer needed, Ms Scaffidi said the city was now regarded as "a very desirable, sought-after residential location".

"Council reviews its rates regularly and assesses the relative costs of servicing each of the categories," she said. "Any increases imposed on a particular sector will be a gradual process.

"Given the recent growth in the number of residential properties, it is considered that the inner city living scheme has been successful."

Perth's residential sector accounts for 17.4 per cent of the city's rate base.

The West Australian

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