he proposed Bill has caused a furore among property owners and estate agents who say the draft legislation will impact heavily on investments and tenants who would have to bear the brunt of increased costs.

While Deputy Minister Yunus Carrim points out that the Bill is targeting guest houses, bed and breakfast establishments and small hotels, stakeholders say this will still have a disastrous impact on business. Lilian Develing of the Combined Ratepayers of Durban, says in that city the proposed Bill will mean a rate increase of 226%. Develing explains that B&Bs in Durban have been charged commercial rates for about three years now. “Their residential rebate has been taken away (R120 000.00) and they pay for industrial electricity, commercial rates on water, sanitation and refuse removal. This will do nothing for the hospitality or tourism industry.”

Develing says scores of small hotels and conference centres have closed down and there is no longer overflow from these establishments to the B&Bs either. She points out that businesses that operate quite legally from home are a growing industry. Their residential rebates have not been taken off the valuation.

In a statement, the ministry said: “…contrary to media reports on the draft Bill, people who own more than one residential property will not have to pay commercial rates on their additional residential properties. The intention is to ensure that guest houses, bed and breakfast establishments, small hotels and the like pay commercial rates. If necessary, we will amend the draft to make this clearer before submitting the bill to parliament.”

Deputy Minister Yunus Carrim has been quoted as saying the proposed law had been misinterpreted. But, stakeholders are not convinced calling for the Bill to be amended.
Carrim says the only policy shifts in the Bill are:

•       Properties used for trading in and hunting of game will be regarded as agricultural property and subject to rates in the interest of equity and fairness;
•       There needs to be greater uniformity across municipalities in rating houses owned by recipients of old age pensions and disability grants;
•       Aspects of public service infrastructure will be excluded from property rates because of their contribution to the country’s developmental needs.

While Carrim has tried to allay the fears of stakeholders, he has some way to go to explain other aspects of the Bill. Among them, what happens to coastal properties that are let out from time to time and from which owners gain financially? What about B&Bs that are already paying commercial rates?