Supplementary Rates Notices After Settlement in Melbourne

A supplementary rates notice adjusts council rates after a property's valuation changes, commonly because a home has been built or land has been subdivided. The current owner is responsible to the council, but the contract may require the vendor to bear the part relating to their ownership period. If the valuation appears wrong, the usual objection period under the Valuation of Land Act 1960 is two months after the relevant notice is served.

What is a supplementary rates notice in Victoria?

A supplementary rates notice is a revised council bill issued during the rating year after a supplementary valuation. It isn't a fine or a second charge for the same thing. It updates the rates calculation because the valuation previously used by council no longer matches the property.

Victorian councils must use current valuations made under the Valuation of Land Act 1960. These may include the capital improved value, which generally reflects the land and buildings, and the site value, which focuses on the land. A supplementary valuation lets council respond to a material change without waiting for the next annual cycle.

Why do new homes and subdivisions receive supplementary rates notices?

New construction and subdivision are express reasons for a supplementary valuation under section 13DF of the Valuation of Land Act 1960. They change either the value of the property or the way separate owners should be rated.

For a house and land purchase in Tarneit, Mickleham or Clyde North, the annual notice may have been based on vacant land. Section 13DF(2)(j) allows a supplementary valuation where buildings, improvements or permanent physical changes materially increase the property's value. A completed home can therefore produce a higher bill.

Subdivision works differently. A townhouse site or apartment development may begin as one parent parcel with one valuation. Section 13DF(2)(c) permits a supplementary valuation when lots are sold and separate owners need their own assessments.

Council must then levy rates separately for each portion for which it has a separate valuation. That's why registration of a plan of subdivision can be followed by new notices for the individual townhouses, apartments or land lots.

Other triggers include demolition, consolidation, a planning change or correction of an error. The stated reason can affect the calculation date.

Can supplementary rates cover a period before settlement?

Yes, a notice can cover days before you became the owner, especially where council requested the supplementary valuation and nominated an effective day. Arrival after settlement doesn't mean every day on the bill belongs to the buyer.

Section 13DF(4) of the Valuation of Land Act 1960 sets out two timing methods for most supplementary valuations:

If council requested the valuation and nominated a day under section 13DFB(2A), the old valuation applies up to that day and the supplementary valuation applies from the next day.
In other cases, the old valuation applies up to the day the supplementary valuation was returned, and the new valuation applies from the next day.

A nominated day can't be earlier than the event that triggered the valuation. If a house was completed before settlement, the revised rates may start before the buyer owned it.

There is a separate retrospective power for certain corrections. Under section 13DF(5), where the supplementary valuation concerns a land use classification error under paragraph (l) or an arithmetical or descriptive error under paragraph (o), council may adjust the rate retrospectively for a period it considers just.

Don't rely on the issue date alone. Compare the reason, effective date, charged period and settlement date.

Why does the supplementary rates bill come to the buyer?

Council generally looks to the present owner and the land, even if part of the amount relates to an earlier owner. Section 156(1) of the Local Government Act 1989 says the owner is liable for rates and charges on the land, while section 175 requires a person who becomes the owner to pay current rates and any arrears that are due.

Section 156(6) makes unpaid rates, interest and certain court-awarded costs a first charge on the land. This is why known arrears must be handled at settlement.

In our practice, we've seen completed homes in Melbourne's growth corridors settle while council records still describe vacant land. Months later, the home is valued and the buyer receives the top-up. That doesn't by itself mean the settlement figures were wrong.

What did the council rates adjustment at settlement cover?

The settlement adjustment apportioned the rates assessment that was known at the time. It couldn't precisely divide a supplementary amount that council had not yet calculated.

The standard Victorian contract commonly apportions periodic outgoings, including council rates, at settlement. Our guide to how council rates are paid in advance or arrears explains why payment status and the period covered are separate questions.

Your conveyancer prepares a statement of adjustments using the council certificate or rates information available before settlement. If that document still values a finished home as vacant land, the calculation can only use the existing assessment. The supplementary notice is then dealt with once its dates and figures are known.

Keep your contract, council certificate, settlement statement and both rates notices so the two calculations can be compared.

Can the buyer recover supplementary rates from the vendor?

The buyer may be able to seek an adjustment from the vendor for the pre-settlement portion, but the answer depends on the contract and the dates on the notice. Council's right to collect from the owner is different from how buyer and vendor agreed to divide outgoings between themselves.

Start with a simple split:

A charge applying only after settlement will ordinarily sit with the buyer.
A charge applying only before settlement may be the vendor's responsibility under the contract.
A charge crossing settlement may need to be apportioned between both parties.

Special conditions can change the usual position, particularly in new developments. Your conveyancer should read the rates clause, special conditions and notice together before anyone demands payment.

Once funds have moved, a vendor contribution becomes a post-settlement request supported by the relevant calculations. Our guide to what happens after settlement covers other loose ends after collecting the keys.

Is land tax treated the same way as supplementary council rates?

No. Council rates and land tax come from different laws, use different assessment periods and aren't adjusted under identical rules.

Since 1 January 2024, section 10G of the Sale of Land Act 1962 has generally stopped a vendor passing land tax to a purchaser under a contract with a sale price below the indexed threshold. For 2026, Consumer Affairs Victoria states that threshold is $10.7 million. If you've heard that land tax is adjusted at settlement, check the contract date, price and current rule rather than applying the old practice to a new purchase.

That restriction doesn't prevent the ordinary apportionment of council rates. Each outgoing has its own legislation and contract wording.

What should you check when a supplementary rates notice arrives?

Check the notice against your settlement documents before paying it or contacting the vendor. A short, orderly review usually reveals whether the amount is yours, shared or open to challenge.

Confirm the property details. Check the address, lot and plan number, assessment number and owner details.
Find the valuation reason. Look for construction, subdivision, demolition, changed use or correction of an error. This helps identify which timing rule may apply.
Mark the effective period. Note the start and end dates of the revised charge, not just the date printed at the top of the notice.
Compare the settlement date. Work out whether the charged period falls before settlement, after settlement or across both.
Check the valuation figures. Compare the old and new site value and capital improved value. Act quickly if the property's condition or description appears wrong.
Send the full set to your conveyancer. Include the contract, Section 32, settlement statement and both rates notices.

Pay attention to the due date while any vendor query or valuation objection is being considered. Lodging an objection doesn't automatically put the council account on hold, so ask council what must be paid to avoid interest.

How do you object to a supplementary valuation?

You can object if the valuation or property description is wrong, but the usual deadline is two months. Section 18 of the Valuation of Land Act 1960 generally runs that period from service of the valuation notice or, for a person served with a rating assessment, from service of that assessment.

Section 17 includes grounds such as:

the assigned value is incorrect
land that should have been valued separately was grouped together
land that should have been grouped was valued separately
the person named isn't liable to be named
the area, dimensions, description or property classification is wrong.

An objection challenges the valuation, not the inconvenience of a later bill. Support it with material such as construction photographs, occupancy records, plans, measurements or comparable sales, and keep proof of submission.

Whether the vendor should contribute is usually a contract question, not a valuation objection.

How can buyers plan for supplementary rates before signing?

Buyers can often spot the risk by comparing the inspected property with the valuation in the Section 32. A finished townhouse paired with a vacant-land valuation is a strong clue.

Before committing:

Check whether the rates information describes the land, the completed dwelling or the parent development.
Ask whether the plan has registered and whether the lot has its own council assessment.
Allow room in your budget for rates to rise after a new home, extension or other improvement is valued.
Make sure known arrears are cleared or allowed for at settlement.
Keep every adjustment document after settlement.
Ask your conveyancer whether a special condition shifts supplementary rates or other outgoings away from the usual apportionment.

This matters before an auction and for new properties where titles, valuations and council records may move on different timetables.

Frequently asked questions

What is a supplementary rates notice in Victoria?

A supplementary rates notice is a revised council rates bill issued after a property receives a supplementary valuation during the rating year. Common triggers under the Valuation of Land Act 1960 include a new building, a subdivision, demolition, changed use or correction of an error.

Why did I get a supplementary rates notice after buying a new home?

The council may have rated the property as vacant land before the home was completed, then updated the capital improved value after construction. Your settlement adjustment used the assessment available at the time, and the supplementary notice applies the later valuation from its effective date.

Can a supplementary rates notice be backdated to before I owned the property?

Yes. Where council requested the valuation and nominated a valid day, the new valuation can apply from the day after that nominated day, which may fall before settlement if the triggering change occurred earlier. Check the notice and section 13DF of the Valuation of Land Act 1960 before deciding which party should bear the pre-settlement portion.

Who pays a supplementary rates notice, the buyer or the seller?

The current owner is generally responsible to council. Between buyer and seller, the contract may allocate the amount according to the period before and after settlement, so a notice crossing the settlement date should be reviewed with the settlement statement and contract.

Do unpaid council rates transfer to the new owner in Victoria?

A new owner must pay current rates and arrears that are due, and unpaid rates are a first charge on the land under the Local Government Act 1989. Conveyancers therefore obtain council information before settlement and arrange for known arrears to be cleared or allowed for.

How long do I have to object to a supplementary valuation?

The usual objection period is two months after the relevant valuation or assessment notice is served. The objection must rely on a recognised ground, such as an incorrect value, description, area, ownership detail or grouping of land, and should be lodged promptly with supporting material.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing is a Melbourne-focused conveyancing firm helping first home buyers and other purchasers across Victoria. New builds in the growth corridors, townhouses on newly registered plans and apartment settlements are part of the team's day-to-day work. Checking the valuation behind a rates adjustment and flagging the chance of a later supplementary notice are practical parts of that work.

Sources we consulted

Talk to us before you sign

If you're buying a new build, a townhouse on a fresh subdivision or a property whose council records may not have caught up, Pearson Chambers Conveyancing can review the contract, Section 32 and rates information before you're committed.

Contact the team for a complimentary Section 32 contract review:

Email: contact@pearsonchambers.com.au

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.