Alarm bells for landlords and renters in Cape Town
Landlords and renters in Cape Town are being warned to review their rental agreements or pay the cost of the new cleaning tariff if it remains in place.
This is according to Rowan Terry, Legal Counsel at TPN from MRI Software, who outlined whether tenants or landlords would be liable for the proposed levy if implemented.
The fee is a fixed monthly amount charged on all residential properties, including sectional title units and vacant land, while commercial properties are exempt until July 2026.
Terry noted that this is not a pay-for-service arrangement, as the city’s cleaning operations will remain unchanged.
“The city’s cleaning services will remain exactly the same. So it’s not really anything based on consumption, which means, by definition, it shouldn’t be a tariff. It would be a rate or a levy, and that gets payable by the owner,” he said.
The new charge has already sparked a legal backlash. AfriForum has called for a review, while the South African Property Owners Association (SAPOA) has filed an urgent court application to have it set aside.
The SAPOA represents some of the country’s largest property investment groups, such as Growthpoint, Resilient, Attacq, and Redefine.
SAPOA’s current focus is on commercial implications, but Terry pointed out that their involvement is strategic, as the tariff will eventually be extended to commercial property owners.
At the heart of the dispute is whether the City followed the correct legislative process. Critics argue it has effectively introduced a new tax without going through the proper channels.
“If the city said it’s a utility charge, there’s an entire process to have that tariff included in the budget, and it must be passed before it can be charged to people, and that process hasn’t been followed,” Terry explained.
“If it’s rather a rate or levy, then there’s an entirely different municipal bylaw process that must be completed before these become payable.”
He added that this procedural failure is the basis of the claim that the tariff may be unconstitutional.
SAPOA’s legal challenge, filed in the Western Cape High Court, disputes multiple aspects of the city’s recently revised budget, including the cleaning tariff, the amended basic water charge, and the basic sanitation charge.
The association has asked the court to declare them unlawful, arbitrary, and unconstitutional. The city made adjustments to its budget last month after thousands of residents lodged objections to steep tariff increases.
Utility charge, tax, or levy
While some increases were softened and the cleaning fee for properties valued under R20 million was significantly reduced from the original draft, the tariff still remains in place.
For both landlords and tenants, the critical question is who will ultimately pay. “Until there is a formal ruling or guidance, what it will come down to is actually the terms of the lease agreement that the tenant and landlord have,” said Terry.
In TPN’s residential lease template, there is a clause passing “any and all utility charges” to the tenant. This means that if the courts decide the cleaning tariff is a utility charge, landlords with similar clauses can recover the cost from tenants.
However, if the charge is defined as a rate, tax, or levy, the situation changes. “Our lease agreement also makes provision for rental increases to accommodate rises in levies, rates, and taxes, but that requires two calendar months’ notice,” He added.
Without these clauses, landlords would have to absorb the cost themselves. Terry urged both parties to be proactive.
“The most important thing here is that landlords must review their tenant agreements. Tenants must do the same.”
“Understand whether this falls under your responsibility or not, and then start negotiating either a cancellation or an adjustment.”
At present, most landlords and rental agents are adopting a wait-and-see approach until the legal challenges are resolved.
However, Terry warned that the tariff could worsen pressures in an already stretched rental market.
“Cape Town rental properties are already exorbitant. There’s a shortage of properties that people can actively afford, and this is only going to make that problem bigger,” he said.
Loading ...