Municipal property rates and taxes under scrutiny

SA Property Owners Association (SAPOA) CEO Neil Gopal attributes that rising municipal rates and taxes is a hot-button issue – one that negatively affects not only operating costs and gross rentals, but also makes demands on property management resources.

SA property owners are 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.

In a statement released today by the South African Property Owners Association (Sapoa), which represents about 1200 companies and organisations in the commercial property sector, it said it had appointed specialist consultant Rates Watch (Pty) Ltd to research municipal budgets for the coming year.

Rates Watch’s mandate from SAPOA focuses on unearthing municipal budget information on key property-related costs, like rates and taxes, electricity, or water in SA’s 11 largest municipalities.

SAPOA CEO Neil Gopal points out: “Rising municipal rates and taxes is a hot-button issue – one that negatively affects not only operating costs and gross rentals, but also makes demands on property management resources.”

Rates Watch will be identifying, analyzing and collecting information on relevant municipal policies and legislation, as well as the municipalities’ Medium-Term Revenue and Expenditure Frameworks, at eleven of the largest metropolitan municipalities throughout SA.
 
"SAPOA members contribute significantly to the rates base, and we believe it to be in the interest of both ourselves and municipalities across SA to partner on this matter,” says Gopal.

“As a sector, commercial and industrial property wants to contribute in a positive way towards the efficient functioning of municipalities.”

SAPOA has further instructed Rates Watch to analyze sample accounts for commercial and industrial properties in all 11 municipal areas, categorized by value: R10 million properties; R50 million properties; R200 million properties and R1 billion properties.

SAPOA has been vocal in challenging the legality of increased municipal rates charged to its members, pointing to rates increases of 23% in the past year – and total rates increases of between 43% and 500% over the past five years.

"Our primary goal is to alert our property owner and investor members to changes in property-related municipal costs that could impact them," says Gopal.