The rates cap and your rates

Find out about the Victorian Government’s rate cap and how this relates to the rates you pay.
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Each year the Victorian Government sets a rate ‘cap’. In 2024/25 the cap is set at 2.75 per cent, compared with inflation of 3.67 per cent.

Last year we increased rates by 2.8 per cent, lower than the 3.5 rate cap. This year's rates increase is calculated off last year's lower figure for rates.

Will my rates go up by the rate cap?

No, the rate cap does not apply to individual rates notices. It means that the general rates revenue raised by Council will not increase by more than the cap.

This does not mean that your rates bill will increase by the same amount. 

Your rates bill may go up or down depending on several things, including the change in the value of your property and the type of property you own.

Will Council get more money if property values go up?

No.

All properties are revalued on 1 January each year. But Council do not receive extra money when property values rise.

Some ratepayers' rates will rise by less than the rate cap and others will pay more. But the overall general rates we collect won't exceed the rate cap. This year the overall rate revenue increase is lower than the rate cap set by the Victorian Government.

Rate capping explained

The Municipal Association of Victoria's video helps to explain how rate capping works.

Find out how rate capping affects us - Port Phillip rate capping fact sheet (PDF 161 KB). For more information go to Essential Services Commission.

How are rates set?

In Victoria, all councils set rates by figuring out the total rate revenue to be collected, and dividing that amount by the total value of all properties. That amount is the rate in the dollar.

Calculating rates

Calculating rates is done by taking the total revenue to be raised for each property type and dividing that by the total value of all properties of that type. That equals the rate in the dollar. The Capital Improved Value of the property multiplied by the rate in the dollar is the general rates due for the property.

In the City of Port Phillip, we have a differential rate scheme. This means the rate in the dollar is different for 6 categories of property:

  • residential
  • commercial/retail
  • industrial
  • vacant (3 times the residential rate in the dollar)
  • derelict (4 times the residential rate in the dollar)
  • unactivated retail (4 times the residential rate in the dollar)

For each category, we figure out the total rate revenue to be collected and divide it by the total value of all properties in the municipality. That amount is the rate in the dollar for all properties of that type.

The total rate revenue cannot exceed the rate cap. This means we do not receive more money when property values rise. 

The rate in the dollar is then multiplied by the market value of each property. Every property is valued every year.

The total amount you pay will also include the waste charge of $203.60 and the Victorian Government's fire services property levy.

What do my rates pay for?

We use rates revenue to fund community services including waste and recycling, graffiti management, childcare, health services, libraries, aged care, environmental sustainability, heritage protection, festivals and events, planning and building regulation, and support for business and the arts.

It is also used to pay for maintenance of community infrastructure including parks, playgrounds, sports fields, foreshore and beaches, roads, footpaths, cycleways, public lighting, drains, public toilets, and community facilities.

Find out more about rates in 2024/25 and what they fund – read our rates brochure (PDF 2.8 MB).

Victorian Government Fire Services Levy increase

Council does not set the levy. It is set by the Victorian Government, under the Fire Services Property Levy Act 2012. The Act allows for a fixed charge and a variable percentage on the Capital Improved Value of a property. Victorian Councils collect the levy for the Victorian Government.

In 2024/25 the Victorian Government announced an increase of 5.1 to 5.6 per cent depending on property type for the fixed charge. The variable charge is expected to increase by:

  • 89 per cent for residential properties
  • 18 per cent for commercial properties
  • 4 per cent for industrial properties.

Residential ratepayers can expect an increase between $30 and $140, depending on the value and type of the property.

Contact us

Our Rates Team is here to help with questions about rate capping.

Send us a message on My Port Phillip

Phone: 03 9209 6777