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Tenants and landlords ‘must object’ to Rates Bill

There are just a few days left to lodge comments on the Municipal Property Rates Amendments Bill – and both property investors and tenants should be objecting strenuously to at least one clause in the proposed legislation.

 That’s the word from Hano Jacobs, CEO of the Realty 1 International Property Group, who says this is the proposal in the Bill to amend Section 1 of the Municipal Property Rates Act to the effect that the rates applicable to residential property will only be charged on primary properties (where the owners live) and not on any residential property that is rented.

 “What this will mean if the Bill is passed, is that residential rental properties will in future be treated as commercial properties, and that the property rates levied on them will in most cases be more than three times what the owners are currently paying,” he says.
 “For example in Tshwane - which has just announced its new municipal rates and tariffs for the next 12 months – the property rates currently payable by the owners of a rental house valued at R760 000 are around R480 a month, but would rocket to more than R1500 a month if the house were to be classified by the council as a commercial property.

 “In Johannesburg it is estimated that the rates on a R1m home would rise from the current R372 to R1533, and the effects would no doubt be similar in most parts of the country, with disastrous consequences for tenants, landlords, the property market and the overall economy.”

 For a start, says Jacobs, most landlords would be forced to sharply increase rentals to help cover the additional expense, which would be very hard on tenants already struggling to cope with higher food and fuel costs as well as increased electricity and water charges. “This would no doubt also severely affect the ability of those who are renting to save for a home of their own one day – and drastically slow the flow of first-time buyers into the property market.
 “However, no-one will be able to blame the landlords, many of whom are already ‘subsidising’ their tenants out of their own pockets because their rentals simply don’t cover all their outgoings, including bond repayments, rates, levies and maintenance costs.

 “Indeed, most people will sympathise – and then promptly lose all interest in residential property investments. Which will, of course, mean the loss of a large number of second and third-time homebuyers at a time when the property market is only just beginning to recover from the recession – and longer-term will also reduce the ability of many people to support themselves when they retire.”

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


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