Flawed Property Rates Bill
Category News
The Municipal Property Rates Amendments Bill is an ill-conceived and even dangerous piece of legislation that would not only cause havoc in the property market if it were enacted as it stands, but could also cause the already delicate relationship between ratepayers and many local authorities to break down further.
So says Berry Everitt, MD of the Chas Everitt International property group, who notes that while much attention is being paid to the provision in the Bill that might see non-primary residences taxed at the same rate as commercial buildings, some other serious flaws in the proposed legislation should not be ignored.
“The worst of these,” he says, “is the suggested amendment to the Property Rates Act that seeks to de-link the right of local authorities to collect revenue in the form of property taxes from the responsibility of those local authorities to deliver services in return for those taxes.
“In short, what it would mean is that municipalities could use the rates they collect from property owners in one area to fund services in another area instead – or actually to fund anything they liked, including the lavish parties and exorbitant salaries for which some councils have already become infamous.”
It is clear that there is great potential here for using selective service delivery to deflect the current widespread dissatisfaction with the dysfunction of many local authorities, Everitt says, “but there is also a real danger that rising anger among those who pay rates and get no service in return would result in large-scale rate boycotts – and even the collapse of the municipal system.
“And that is really not something we should be risking at a time when the recovery of our economy hangs in the balance and we need stability and certainty to attract more investment and create more jobs. Investors hate disorder.”
Another problem with the Bill, he says, is that it seeks to give local government MECs the power to extend the validity of property valuations from five to seven years. “This is probably just an attempt to address the chronic shortage of valuation expertise in SA, but at the same time it fails to acknowledge the speed with which property values can change and with which rates need to be adjusted to take account of such changes.
“For example, when property values drop as they did during the recent recession, it could be seven years before rates based on higher previous valuations are adjusted downwards – which would, once again, be very unfair on ratepayers.
“Overall, then, we think the Municipal Property Rates Amendments Bill needs to be revisited and extensively rewritten before it goes to the National Assembly, and we will certainly be recording our objections to it before the deadline on Friday 22 July.”
Author: Barry Davies