Rates increases could reach 400%

Posted On Monday, 19 November 2007 02:00 Published by
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Sectional title homeowners will have to be rated at between 25% and 40% of ordinary residential owners, or else their rates will go up by as much 400% more than they paid before the Rates Act was applied

So says Andrew Schaefer, MD of SA’s biggest sectional title manager Trafalgar.

Johannesburg municipality has agreed to charge sectional title owners less than other homeowners, but Cape Town is charging them at the same rate. Johannesburg mayor Amos Masondo said last week that Johannesburg wanted to encourage higher density living through sectional title development.

Sectional title bodies corporate were rated on the value of the properties as commercial buildings on single stands. Unit owners paid a proportion of those rates as part of their body corporate levies. But the new Rates Act says municipalities must value and rate sectional title units individually.

Cape Town charges its single residential and sectional title homeowners 0,00495 cents in the rand after it has applied a 35% rebate for residential property. Johannesburg will charge single residential owners 0,005 cents. It is still holding public meetings with sectional title owners to determine the best rate.

“We took five Johannesburg sectional title properties at random (see graphic),” says Schaefer. “And found that individual rates paid by individual sectional title owners would increase between 127% and 424%. Some of that increase reflects a rapid rise in prices in, say, Yeoville.

“But the new rating at 0.005 cents would clearly be a painful experience for sectional title owners, many of whom in the inner cities already struggle to pay their levies at the lower rating. It’s also not entirely fair to do so, because they still occupy less land than single residential and will play a major part in the densification of SA’s cities to make them more sustainable. The body corporates also carry out many of the function of municipalities like paying in bulk for water, electricity and sewerage and having to collect them individually from occupants.”

At 0,00125 cents, Dafield Court in Yeoville and Montana in Weltevreden Park would pay over 30% more while Mont Serrate in Morningside would pay 46% less. At 0,002 cents, Dafield and Montana would pay over 100% more and Mont Serrat just under 10%.

“We think Johannesburg is smart to rate sectional title owners differently,” add Schaefer “They will be rewarded by more rapid densification and, of course, more votes from a category of ratepayer that is likely to be the majority in most cities in the next few decade.”

Publisher: Trafalgar
Source: Trafalgar

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