Up to 20% of monthly living costs in South Africa could be going to rates from next week

 ·29 Jun 2023

Organisation Undoing Tax Abuse (Outa) has called for the City of Johannesburg to freeze property valuation increases that residents cannot afford on top of already excessive increases in other city tariffs.

Although property owners may have sighed with relief when MMC of Finance, Dada Morero, announced an increase in property rates of only 2% earlier this month, Outa has warned that this increase excludes the valuations increase posed by the recent General Valuation Roll (GVR) of 2023.

On average, the increase from the new valuation roll in Joburg was 12%, compounding the property rate increases many ratepayers will have to fork out for their homes.

However, Outa Executive Head of Social Innovation, Julius Kleynhans, told Newsroom Afrika that some residents had seen a property valuation increase of as much as 70% – significantly increasing their rates come 1 July 2023.

The organisation noted that unfair valuations have affected around 934,652 residents in Johannesburg.

What’s worse is that these massive property rate increases are on top of already exorbitant increases in other city tariffs, including electricity (14.97%), water (9.3%), sanitation (9.3%), and refuse removal (7%).

Outa Executive Head of Social Innovation, Julius Kleynhans.

“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.

He added that it has become too expensive to live in Joburg for many South Africans, and the looming rate increase is a significant concern with regard to the sustainability and affordability for ratepayers.

“Semigration is real, and people and businesses are leaving Joburg to live in municipalities where it is cheaper and safer, where they can protect their asset value and where they get good services for the money they pay,” said the organisation.

Call to freeze property valuation increases

In light of the affordability concerns of the rate hikes, Outa has written to the City of Johannesburg asking for rate increases based on reassessed property values to be suspended until the objection process is finalised. 

“Outa wants the city to hold off on increases linked to the updated valuations where objections have been lodged until these have been resolved,” it said.

“The method used by the city’s valuers may have resulted in mistakes concerning fairness and reasonableness on certain property values.

“This poses significant financial implications for these property owners, and it would be fair for the objection process to be finalised before rate increases are applied,” said Kleynhans.

“With this in mind, and the recent disruptions within the city that had a direct effect on service delivery, we asked the city to consider flagging all accounts which have lodged a formal objection to the new proposed valuations within the GVR 2023 and to apply only the 2% property rates increase until such an objection has been resolved,” added Kleynhans.

Many have criticised the municipal rate hikes across the country as a means for cash-strapped metros to generate more revenue; however, Kleynhans said there are better ways for municipalities to cut costs before applying exorbitant rates on residents that can no longer afford them.

Softening the blow

According to Morero, the city has already taken complaints and feedback on the rate hikes into account, which resulted in the lowered increases.

“We understand that many households are currently struggling from the high rising costs of services. The city understands that our residents are battling under low economic growth, unemployment, load shedding and still feeling the effects of Covid-19 pandemic,” he said.

“We want to assure residents that the city has listened to their comments and inputs,” said Morero.

Morero said the city is striving to subsidize more residents who are unable to afford the high costs of municipal services. However, hikes are unavoidable as the city is buying bulk services such as electricity and water at a very high cost.

Read: Expect interest rate pain to stick around: Kganyago

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