Excessive rate hikes by big metros unsustainable – Sapoa

The “continuous and excessive hiking of rates and taxes” in key metropolitan municipalities in the decade to 2021 is “unsustainable for the country’s property industry”.

This is according to findings mapped out in a study commissioned by the South African Property Owners Association (Sapoa).

The purpose of the study, according to Sapoa’s outgoing president Malose Kekana, was to look at the socioeconomic impact of rates and taxes across different municipalities in the country.

A presentation delivered by Kekana at the Sapoa Annual Convention and Property Networking 2023 event at Sun City notes that based on the study’s findings, the hikes have had a negative impact on growth and employment in the industry.

As such the association deems them to be “unlawful and unconstitutional”.

The association says it has taken steps to meet with city administrations in Cape Town, Johannesburg, Tshwane, eThekwini and Nelson Mandela Bay “to start the consultation process required by the applicable legislation,” to work towards a solution.

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This comes after municipalities such as eThekwini have in recent months been subjected to the ire of ratepayers disputing massive hikes in rates and taxes while service delivery has remained poor.

Read:
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Sapoa has spoken out before and taken action against rate hikes in major metros.

Most recently, Moneyweb reported on the association’s joint efforts with JSE-listed property and private memorial parks developer Calgro M3 to challenge the eThekwini municipality’s decision to implement a 100% increase in the rand rate charged on vacant land.

The two parties say the metro’s rate charge is significantly higher than those of other metropolitan municipalities. This, according to Sapoa, will have a dire impact on property values in eThekwini and will ultimately slow development and growth in the metro as investors will regard it as less able to generate acceptable returns.

‘Poor leadership’

In an interview on the Property Pod in June, Kekana bemoaned the role of poor leadership in major metros, pointing specifically to a deterioration in Johannesburg, and the impact this has on the industry.

“For me, local government is our biggest bugbear. It is dysfunctional, it’s not being taken seriously and it is hurting this economy and is hurting the people of this country.

“So that for me is the number one biggest problem that we’re seeing. I’m astounded at the poor leadership that we’re seeing within our government,” he said.

To be part of the solution in addressing the issues within the country’s metros, Sapoa said it is researching precinct management in the country. With this exercise, it says it is hoping to get a “holistic understanding of the industry’s contribution to the effective delivery of services at the municipal level”.

“The report will focus on gathering information on the contributions made by central improvement districts to public safety measures, cleaning services, maintenance of infrastructure, environment upgrades and social services,” Kekana said.

Listen to Suren Naidoo’s interview with Sapoa CEO Neil Gopal in this episode of The Property Pod (or read the highlights here):

You can also listen to this podcast on iono.fm here.