Zuma signs Municipal Property Rates Amendment Act
South Africa's President Jacob Zuma has signed into law the Local Government Municipal Property Rates Amendment Act, the Presidency said on Sunday.
The Act seeks to regulate the categories of property in respect of which rates may be levied.
It also looks at regulating the time frames of publication of the resolutions levying rates and what must be contained in the promulgated resolution.
It Provide for the exclusion from the rates of certain categories of public service infrastructure;
It gives powers to a municipality to levy different rates on vacant land and power to the MEC of Local Government to extend the period of validity of a valuation roll by additional two years.
According to the Presidency, it amends the dates on which a supplementary valuation takes effect and Address the problems that have been experienced in the implementation of the Local Government: Municipal Property Rates Act, 2004.
Commercial Property Owners Feeling the Squeeze
The biggest threat facing the commercial property market is the increasing cost of municipal rates and services tariffs together with ever increasing "stealth taxes" — and the result has to be strong downward pressure on net rentals.
Commercial property owners have been up in arms over municipal rates and taxes increases throughout South Africa, questioning the legality of rate hikes charged to landlords in accordance with the law.
According to SAPOA, a commercial property sector representative body with 1200 members, the yearly increases in municipal rates and taxes have impacted the SA economy to the tune of 4,500 lost jobs as well as lost economic output of some R2.8 billion.
These findings were recently announced in June. It comes in the wake of SAPOA earlier this year appointing specialist consultants Rates Watch (Pty) Ltd, in partnership with the University of Pretoria, to investigate municipal budgets for the coming year.
The report showed medium-term growth in property rates in SA’s metropolitan regions ranged from 4% to 11% a year over the past four to five years. The weighted average growth in property rates was 6.7% a year.
The highest increases were seen in Nelson Mandela Bay at over 11%, followed by Mangaung at 10.97% and Tshwane at 10.75%
The lowest increases were posted in Ethekwini, Polokwane and Ekhurhuleni at 4.3%, 5% and 5.6%, respectively.
Similarly, the ratio of rates and taxes varies widely across the country. Although a ratio of 2:1 to 3:1 on the tariff for business and commercial properties was found when compared to residential properties, the highest ratio in the research by Rates Watch was 5:1 in Mangaung. Of note is also the fact that the ratios are the effective ratios after taking into consideration the rebates for residential property.