Cape Town makes changes after 20% rate hike fury

Following significant backlash from residents, particularly in the middle class, the City of Cape Town has revised some budget items tabled in March, extending rate relief measures to cover higher value homes.

The initial proposals tabled with the budget in March would have seen property rates for all residential, commercial, and industrial properties rise by 7.96%.

However, owners of more expensive homes would have faced hikes of over 20%.

At the time, Cape Town mayor Geordin Hill-Lewis defended the move, saying that larger than usual increases for more valuable properties were necessary to finance infrastructure development and also subsidise lower-income households.

The plans drew outrage from many residents in the city, particularly those whose homes were in the R4 million to R7 million range.

The mayor noted that only about 40,000 of the city’s 1 million rateable properties fell into this range, and only homes exceeding R7 million would see rate hikes at around 20%.

Nevertheless, the city has now revised some of its proposals to account for the feedback.

Specifically, the city will now extend the ‘first R450,000 rates-free’ benefit to all homes up to R7 million property valuation, up from a previous limit of R5 million.

As far as other relief measures go, more pensioners will qualify for support, with the city raising the qualifying threshold to R27,000 monthly income per household, up from R22,000, regardless of property value.

The city said it would also significantly reduce cleaning charges for all residential properties under R20 million compared to the tabled March 2025/26 budget.

A pensioner rebate for City-Wide Cleaning has also been included, which will offer up to 100% off this charge.

It added that, compared to the March budget draft, it will also lower fixed water charges for property value bands between R1 million and R25 million.

Through these relief measures the city said that total monthly bills should be lowered relative to the March budget by between 15% and 40%, depending on the value of the property.

Hill-Lewis said the relief measures should ensure that 97% of ratepayers won’t experience the 20% increase in monthly bills, and that virtually no one will see a 30% increase in any ‘reasonable’ consumption scenario.

“The 3% of cases where this year’s tariff reforms may lead to an unusually steep increase of over 20%, relate to homes of high value with very low electricity and water usage well below the average household, likely due to large solar and borehole investments,” he said.

“These are exactly the customers who the city encourages to sell us as much of their excess solar power that they can generate, in exchange for municipal bill credits, and even cash once the total bill reaches zero.”

Other relief measures and changes

The mayor said that other measures will remain in place, including discontinuing the 10% cost embedded in electricity prices that previously paid for city-wide cleaning, and sticking to the new charge.

For commercial customers, however, it will give them more time to adapt to the phased-introduction of the tariff, keeping the current electrcity-linked service charge in place for 2025/26.

Hill-Lewis stressed that the city cannot fund itself by relying on lower-income and affluent households making equal contributions.

“If a flat charge of say R500 is billed, and one household earns R20,000 while the other earns R100,000 a month, this charge represents 2.5% and 0.5% of their monthly income, respectively,” he said.

“This means the impact on the lower-income household is actually five times more than on the higher-income household. Let’s call that what it is – regressive taxation. We are opposed to it.”

The mayor said that Cape Town has the lowest monthly bills for residents and offers the best services and value for money that other cities in the country.

“While ratepayers pay more in other cities and get failing services and infrastructure in return, here in Cape Town they pay lower bills and get a functional, successful city in return,” he said.