President Thabo Mbeki has assented to Local Government: Municipal Property Rates Bill, which introduces a new rates system, and signed it into law.

This is according to the announcements, tablings and committee reports issued in Parliament.

The bill was passed by the National Assembly in February and by the second chamber of Parliament, the National Council of Provinces, in March.

The general principle is that property must be valued according to its market value and the rate levied by a municipality on property must be based on that value.

The national Finance Minister can peg the extent of increase of municipal rates, but these will be roughly in line with inflation.

The bill excludes rates on a property valued up to 15,000 rand.

Municipalities may levy different rates for different categories of rateable property which includes residential and industrial properties, business and commercial properties, properties used for agricultural purposes and communal land.

A significant section applies to rates on property in sectional title schemes.

This says that a municipality may not recover the rate on a sectional title unit (known as flats in South Africa) or any part of such rate from the body corporate controlling a sectional title scheme - as is at present the practice - except when the body corporate is the owner of any specific sectional title unit. The rate levied will be payable, instead, by the owner of the unit.