Municipal rate hikes deal a major blow to households – and the South African economy
Municipalities in South Africa have increased rates significantly in recent years, dealing a big blow to property owners and driving up inflation for the rest of the country.
“Increases in municipal property valuations and rates have resulted in substantial tariffs being levied on commercial and industrial property owners, which have continued increasing significantly each year,” Mark Govender from Swindon Property Valuers said.
“For the past five-year period, these commercial and industrial property owners have raised objections regarding total rates increases ranging between 43% and a whopping 500%. In 2023, while the increases vary per province, they have seen rates increase on average by ±20%.”
The South African Property Owners Association (SAPOA) has also raised concerns that municipalities are contravening National Treasury’s guidelines by raising rates excessively, which exerts upward pressure on inflation.
“These ongoing, hefty rates increases for commercial property simply make no sense. Not only is it unsustainable, but property owners pass these increases through to tenants, which has a material impact on the health of businesses in the economy,” Govender said.
Household pain
The municipal rates increases have also affected South African households, with many residents already struggling amidst the challenging economic environment.
For instance, despite the City of Johannesburg only increasing property rates by 2%, the Organisation for Undoing Tax Abuse (Outa) said that this increase does not include the most recent General Valuation Roll (GVR).
On average, the new valuation roll in Joburg was 12%, with some property valuations increasing as much as 70%, which has compounded the property rates increases.
Outa Executive Head of Social Innovation, Julius Kleynhans, said that the massive property rates increases are now on top of several other city tariffs, such as electricity (14.97%), water (9.3%), sanitation (9.3%), and refuse removal (7%).
“Outa did the maths, and these increases will become around one-fifth (20%) of a ratepayer’s monthly expense, just going to city rates and tariff charges,” said Kleynhans.
Amidst the rising cost of living and poor governance in Johannesburg, many are flocking to the Western Cape to escape the instability.
However, as reported by EWN, Cape Town has also not been immune to a rise in costs, with political parties, civic organisations, and residents recently protesting over the 17.6% tariff increase for electricity, which was above the 15.1% tariff set by the National Energy Regulator of South Africa.
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