South African Property News

Johannesburg Rates Tariffs Approved

An article in BuaNews reports that the City of Johannesburg has approved the new assessment rates tariffs, which should come into effect on 1st July 2008. The public is able to raise objections until 27th May.

The City has said that it remains committed to implementing the new Municipal Property Rates Act in a “fair and equitable manner”. The announcement of the final recommended assessment rates will help property owners to determine how much they will paying in assessment rates from July this year (Mankodi Moitse, Executive Director of the City’s Finance Sector) and the City has made every effort to keep the new system as simple as possible.

One of the main features included in the new assessment rates system is a change in the valuation basis, from site values to full market values. The new valuation roll will take into account the current growth in the property market. The policy also proposes new property rates, which is the first significant reconsideration of property tax since well before apartheid came to an end.

The City’s Rates and Taxes Director, Erika Naude says that the intention here is not to increase the income of the City of Johannesburg, but instead “to ensure that all properties are valued based on their market value, land and improvements” (BuaNews). 20% of the City’s total income is derived from the rates levied and this money is used to fund a variety of services that benefit all residents, including emergency services, public facilities, public safety, street lights, clinics, community centres and parks (Naude).

In Johannesburg, the first R150 000 of the residential property value will be excluded from rating and certain categories of ratepayers will pay less tax than in the past. There are a number of key principles that will guide the City during the new system’s implementation:

- a principle of “revenue neutral”, meaning that no major loss or surplus will be gained to the total budget of the Council;
- equity and fairness will be ensured through all categories of property;
- an endeavour will be made to find mitigating mechanisms against the huge increases on the individual property owner.

The final draft of the Rates Policy and its by-laws were approved by the City Council in a meeting on 31 January this year. Around 155 000 sectional title property owners and around 70 000 additional properties now fall within the tax net. These properties previously fell below the threshold of the levies’ assessment rates.

The City has thanked the residents and businesses of Johannesburg for taking part in the public processes and hopes that “this constructive approach will continue to characterize the implementation in the coming months” (BuaNews).

The information in this article is courtesy of Luyanda Makapela (“South Africa: New Rate Tariffs Approved by Joburg Council”, BuaNews, Wednesday 26 March 2008).

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