FILTERS:

Urgent alert

14 July 2011

There is a proposal to amend Section 1 of the Property Rates Act to the effect that all residential property, used to accommodate persons other than the owner for gain, should be charged commercial rates on the property.

This would severely affect the monthly costs of owning property and impact severely on investment buyers; those people who rely on income from their property/ies and ultimately on tenants.

Objections can be lodged before the 22nd July 2011. These can be faxed to (012) 334-4811 or emailed to mpra@cogta.gov.za

 

They have copied their objection below for you to read - if you are also concerned lodge your objection timeously too!!

Download the Local Government: Municipal Property Rates Amendment Bill

It reads as follows:

TO WHOM IT MAY CONCERN

Amendment of section 1 of Act 6 of 2004 -

THE PROPERTY RATES AMENDMENTS BILL

Paragraph "o" of the Property Rates Amendment Bill provides for the following definition of residential property:

'Residential property' means property of which the primary use or permitted use is for residential purposes, excluding such property used to accommodate persons other than the owner for gain;''

I assume that residential property “used to accommodate persons other than the owner for gain” will be levied rates at a commercial rate - I therefore hereby record my objection to the above proposed amendment on three grounds:

  1. For many people the ownership of a property which is rented out 'for gain' is specifically geared to provide additional income, either to support themselves and their families and as provision for their retirement years. The government is encouraging the public to save in order to be able to provide for oneself instead of being a burden on the state. If this amendment is enacted these persons will be severely disadvantaged as a result of substantial increases in the rates on these properties, possibly rendering the investment unviable and even unaffordable. Owners of income genera ting properties are already paying additional Capital Gains Tax seeing that they do not qualify for the same exemptions as those for whom their property is their primary residence if and when they sell their properties, and on rentals received, they are paying Income tax.

    Many people make provision ahead of time for their retirement years by purchasing a retirement property when they can afford it and rent it out until they are ready to retire. If the proposed amendment is enacted it may well prevent people from making this provision - is the government going to subsidize retirement homes to make them affordable in people's latter years.

    Furthermore in the current economic climate it is not uncommon for a property owner not to reside in his own property but rather to rent it out to earn income and reside elsewhere with relatives and contribute towards those household expenses – if this amendment is enacted then in such a situation 2 property owners would have to pay rates at a commercial rate for their properties: The person who could not afford to continue to occupy his own property and the owner of the property that has taken on the boarder as he is now accommodating another person for gain.

  2. Landlords will have to increase rentals to cover the additional expense which will result in the tenants having to carry the burden. The possibility of these persons renting property ever being able to save money to buy their own homes is further reduced. There is also a strong likelihood that increased rentals at the bottom end of the market will result in those tenants not being able to remain in occupation and ending up homeless – having to resort to informal settlements like squatter camps. Given the lack of housing in South Africa it is bizarre that anything that would lead to an aggravation of the situation would be considered.

  3. The property market is already in the doldrums, and this proposed amendment will substantially reduce the number of investors of residential property as the additional rates burden will result in substantially reduced returns from these properties.

With all due respect the proposed amendment is unviable and will have major implications for many older people and those who are carefully making provision to support themselves and not being a burden on the State, for those using income generated by or through their properties to support themselves and their families and on those persons who are tenants and who will have to pay higher rentals for their accommodation.

Kind Regards, 

Maria Davey

 

 

Reader Comments: 8
Tersia Mostert 15/07/2011:

I support the objection to the proposed new rates amendments bill.

Robert Krautkramer 15/07/2011:

If commercial rates are levied, then such houses/flats should also be rezoned. How can you pay commercial rates on a residential zoned property? The property is aimed to provide housing, and not for commercial enterprise. Even though residential letting is a form of commercial gain for the landlord, no commercial trade takes place on the residence, which should be the ultimate test to determine rates. If such rates are to apply, then all tenants should be allowed to also run a business from the premises.

Margarethe de Beer 15/07/2011:

Dear Sir / Madam I hereby object to the amendment of the act and hereby lodge my formal objection. There is no greater burden on council if a residential property is rented out or occupied by the owner. Council first has to start to deliver before they can come and say that they are entitled to more money. My question is more money for what? They do not fix the roads, they do not maintain and replace road signs, they do not maintain the parks, they do not clean the fields, refuse only gets collected when and if they feel like it so people dump there trash every where, why not in force the no littering laws and fining the people who do litter and obtaining the extra funds they need that why. This would of course entail that council should not litter themselves and that someone would actually have to work to fine the people littering.

The council and their employees are more on strike than anything else. Meter readings aren’t done and then it is not there problem but yours. People who are supposed to help you at council are either always rude, unwilling to help or just plain to stupid to help you as no training it seems is necessary to work for council. Why not train your employees how to the jobs that they have, pay them what they are really worth and not what they want. Council should start by delivering and then they can look at upping there rates if they actually can show what they do with money. Where are the poor people going to live if this amendment gets passed? Is government going to supply housing? No they are not they can not deliver, all they are interested in is looking for ways to make more and more and more money out of their citizen. All this amendment will achieve is making more of honest and hard working citizens money available for corrupt council and government employees and their friends with no benefit to the person who is paying. And lastly I would like to say, first learn to implement the acts that you do have before you go and make new ones or try and change the ones you already have. Margarethe de Beer

Roland Darroll 17/07/2011:

Amendment of section 1 of Act 6 of 2004 - THE PROPERTY RATES AMENDMENTS BILL Paragraph "o" of the Property Rates Amendment Bill provides for the following definition of residential property: 'Residential property' means property of which the primary use or permitted use is for residential purposes, excluding such property used to accommodate persons other than the owner for gain;'' I assume that residential property “used to accommodate persons other than the owner for gain” will be levied rates at a commercial rate - I therefore hereby record my objection to the above proposed amendment on three grounds:

For many people the ownership of a property which is rented out 'for gain' is specifically geared to provide additional income, either to support themselves and their families and as provision for their retirement years. The government is encouraging the public to save in order to be able to provide for oneself instead of being a burden on the state. If this amendment is enacted these persons will be severely disadvantaged as a result of substantial increases in the rates on these properties, possibly rendering the investment unviable and even unaffordable. Owners of income generating properties are already paying additional Capital Gains Tax seeing that they do not qualify for the same exemptions as those for whom their property is their primary residence if and when they sell their properties, and on rentals received, they are paying Income tax. Many people make provision ahead of time for their retirement years by purchasing a retirement property when they can afford it and rent it out until they are ready to retire. If the proposed amendment is enacted it may well prevent people from making this provision - is the government going to subsidize retirement homes to make them affordable in people's latter years.

Furthermore in the current economic climate it is not uncommon for a property owner not to reside in his own property but rather to rent it out to earn income and reside elsewhere with relatives and contribute towards those household expenses – if this amendment is enacted then in such a situation 2 property owners would have to pay rates at a commercial rate for their properties: The person who could not afford to continue to occupy his own property and the owner of the property that has taken on the boarder as he is now accommodating another person for gain. Landlords will have to increase rentals to cover the additional expense which will result in the tenants having to carry the burden. The possibility of these persons renting property ever being able to save money to buy their own homes is further reduced. There is also a strong likelihood that increased rentals at the bottom end of the market will result in those tenants not being able to remain in occupation and ending up homeless – having to resort to informal settlements like squatter camps. Given the lack of housing in South Africa it is bizarre that anything that would lead to an aggravation of the situation would be considered.

The property market is already in the doldrums, and this proposed amendment will substantially reduce the number of investors of residential property as the additional rates burden will result in substantially reduced returns from these properties. With all due respect the proposed amendment is unviable and will have major implications for many older people and those who are carefully making provision to support themselves and not being a burden on the State, for those using income generated by or through their properties to support themselves and their families and on those persons who are tenants and who will have to pay higher rentals for their accommodation.

Raymond Blignaut 19/07/2011:

I object to this bill as we are already subject to capital gains tax so why another rates tax? It will be a nightmare to administer as people move in and out of their own properties, which will be deemed the "commercial" one?

Jill Fish 19/07/2011:

I object to another form of taxation with the new rates amendments bill. Legal extortion is what it boils down to for home owners who are already paying exorbitant rates for service levels which are sadly lacking.

G Hodson 21/07/2011:

Disgusting

John de Koning 21/07/2011:

I object to the new rates amendments bill, it is unconstitutional.

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