Rates: to pay or not to pay?

(By Muhammad Ziyaad Gattoo, Director in Cliffe Dekker Hofmeyr's Real Estate Practice)

Should there be a clear relationship between the services provided by a municipality and rates levied thereby?

This question was considered by the Supreme Court of Appeal (SCA) in the case of Blair Atholl Homeowners Association v The City of Tshwane Metropolitan Municipality (20634/2014) [2015] ZASCA 195 (1 December 2015).

The SCA rejected the argument that rates payers in the Blair Atholl Estate, which installed and maintained its own services (usually supplied by the City of Tshwane Metropolitan Municipality), should be exempt from, or allowed a rebate or reduction in rates levied on their properties.

In this regard, it is important to note that rates are a property tax. They are imposed on all rateable property in a municipality and are not linked to the provision of services. Rates are levied on the value of property to cover the running costs of a municipality and to achieve its objects as set out in s152(1) of the Constitution. Section 229(1)(a) of the Constitution distinguishes between rates and surcharges, surcharges being imposed for the provision of services by a municipality.

The appellants based their argument on the supposition that there must be a clear relationship between the services supplied by a municipality to its rates payers and the rates those rates payers are liable to pay. On the above explanation of rates and surcharges, the SCA dismissed the appellants’ application.

As long as a municipality’s rates policy is in line with the Constitution and the Local Government: Municipal Property Rates Act, No 6 of 2004, that municipality is entitled to levy rates on properties within its area, whether or not it supplies services to those properties, or whether or not the residents of those properties enjoy communal services provided by the municipality, such as libraries or public open spaces for example.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us