Joburg to take money from property sales to cover debts owed

The City of Johannesburg has announced a ‘radical’ debt collection project that will be coming after wealthy residential defaulters and businesses.

The initiative will include a new process to get clearance certificates for property sales, which will see the city take what is owed from the proceeds of the sale.

Called ‘Project Lokisa’, the operation will be a large-scale revenue recovery project that will target the “worst offenders” who have been defaulting on their bills.

The city said that it will have an intense focus on disconnecting illegal connections.

It identified the biggest defaulters in the metro, which include:

• Large electricity and water consumers with properties valued above R100 million;
• High valued residential properties valued at more than R5 million;
• Commercial businesses;
• Government departments and State-Owned Entities (SOEs).

The city said that under the project, it will introduce changes to the process of getting Clearance Certifications when sellers sell their properties.

This will ensure that the city does not lose money owed for municipal services by the seller when they finally put their property on sale.

“A Clearance Certificate will be provided to the transferring attorney and the customer with a notice of the total amount owing above 90 days,” it said.

“Attorneys will be given notice to sign an Acknowledgment of Debt (AOD), which will authorize direct payment to the city from the sale proceeds.”

The city urged all property owners and businesses to settle their outstanding accounts or alternatively make payment arrangements with the city to avoid disconnections and legal action.

The debt-collection drive comes as the City of Joburg faces massive budget issues, with spending requirements putting the already massive R89 billion budget under extreme pressure.

The city wants to implement a 13.9% increase in water and sanitation, 12.41% in electricity, and 4.6% in property rates.

This puts additional burdens on Johannesburg residents, who are being asked to pay more without a guarantee of improved services.

The increases also come at a time of economic hardship, high unemployment, and stagnant service delivery.

However, the city has also been hit hard by residents not paying their bills and using illicit methods to bypass meters and billing.

The city has previously noted that thousands of ‘rich’ residents are part of the problem, with debts piling up in affluent suburbs where meters have been tampered with.

While resident owe billions of rands in unpaid bills, the City of Joburg itself is also billions of rands in debt to utilities like Eskom.