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Rising property rates causes concern

The South African Property Owners Association (Sapoa) has appointed Rates Watch, a specialist consultancy, to research budgets for the coming year due to the sharp escalation in municipal costs. 

Rates Watch will focus on unearthing budget information from the 11 largest municipalities on key property-related costs, such as rates and taxes, electricity and water.

Rates Watch must also identify, analyse and collect data on relevant municipal policies and legislation and the medium-term revenue and expenditure frameworks at these large municipalities.

Last year saw Sapoa warning that commercial property owners were poised to challenge the major urban municipalities over high increases in rates, which they said were unsustainable.

Estienne de Klerk, Sapoa's president, said last year that the association would question the legality of these increased rates and if it did not receive a satisfactory response, it would approach the local government minister, or even the finance minister.

Sapoa chief executive Neil Gopal has adopted a softer approach, stating yesterday that its primary goal was to alert property owners and investor members to changes in property-related municipal costs that could affect them.

'As a sector, commercial and industrial property wants to contribute in a positive way towards the efficient functioning of municipalities.

'Sapoa members contribute significantly to the rates base and we believe it's in the interest of ourselves and municipalities across South Africa to partner on this matter,' Gopal said.

He did admit that rising municipal rates and taxes were 'a hot-button issue' and one that negatively affected not only operating costs and gross rentals but also made demands on property management resources.


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