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The article below is aimed at keeping you abreast of the proposed changes to the legislation regulating the imposition of rates and taxes on immovable property:

Rates and taxes is a fee charged by municipalities to all owners of properties to cover expenses for providing community services.  It is calculated on the market value of the land owned.

The Municipal Property Rates Act, 2004, defines the market value as the price that you would realistically get for a property in the open market, between a willing buyer and a willing seller.  With this value as a base, it is possible to assess a comparative value for all properties within a neighbourhood.  This assessed value is referred to as “the municipal value”, and is only used for purposes of levying rates and taxes.

The Municipal Property Rates Act, 2004, implemented from 1st June 2008, is new National legislation, implemented by all municipalities in the country.  The Act has had the effect of changing the way rates and taxes are determined by municipalities.  The Acts:

• regulates the power of municipalities to levy rates;
• excludes certain properties from rating in the national interest;
• makes provision for municipalities to implement a transparent and fair system of exemptions;
• regulates municipalities to formulate rating policies;
• makes provision for fair and equitable valuation methods of properties;
• makes provision for an objections and appeals process.

There are various changes that have occurred.  Some of the major changes include:

• The City of Johannesburg previously rated property based on the value of the land only.  The Act prescribes that properties now be valued on the total market value of the property, i.e. land and improvement value.
• All individual property owners are now levied.  That means that each Sectional Title owner now receives a statement for rates and be responsible for the payment thereof and no longer the Body Corporate on behalf of the entire scheme.
• The Act provides for Public Service Infrastructure to be valued and rated.

have been made that may affect the property.  With the development of new properties, these changes are recorded and new properties valued and included in the property database of the Council.

For residents of Johannesburg, rates and taxes do not apply to the following property:-

• Property owned by religious bodies
• Residential property where the market value is below a certain threshold.  This applies only to residential property. 

The rating policy determines categories of property owners that are exempt from paying rates or where rebates will be applicable.  The Council provides for rebates for certain categories of owners or categories of property in terms of the rating policy.  The Municipal Property Rates Act, 2004, provides that different tariffs may apply to different categories of property e.g. a different tariff may be applicable to residential property than to business property.

Once a year, the Council calculates the budget to provide services.  It then determines an assessment rate tariff (called the “Rate in the Rand”)

THIS ARTICLE WAS PROVIDED BY Saley Laher & Associates (Attorneys, Notaries & Conveyances).  FOR FURTHER PROPERTY QUERIES OR ASSISTANCE CONTACT (011) 728-6666 (Zeenat Hoosen)..