Cape Town residents irate with Property Rates

Blouberg_Cape_Town

The Cape Town city council has received thousands of objections to municipal property valuation increases of more than a third on average – but in some cases as high as 100%.

There is also expectations that more objections will flow in faster as the end of month deadline for objections approaches.

It is always last minute here, so we expect quite a lot more more to come in towards the 30th of April, Ian Neilson, deputy mayor of the Democratic Alliance-controlled council, said of the restive response from Cape Town’s 875,000 ratepayers.

The city’s schedule of rates increases for single residential homes, based on sales in recent years, shows these will go up by an average of 18% in Noordhoek, 23% in Elsies River, 25% in Bonteheuwel and Bishop Lavis, and 28% in Retreat and Vredehoek.

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The percentages double along the Atlantic beachfront and in the leafy suburbs surrounding the inner city, which has long been a property market more comparable to Europe than the rest of the country and includes a house – in Bantry Bay – valued by council at R250.8 million.

In July, rates will go up by 41% in Camps Bay, 44% in Upper Oranjezicht, 49% in Sea Point, 54% along Scarborough Beach, 51% in Tamboerskloof and 57% in Upper Gardens.

However, home owners here face the irony that their properties may no longer sell for as much as the new municipal estimates after the market collapsed in the last 18 months. The valuations are based on sales in surrounding streets between July 2015 and July 2018, and for most of that time, prices were still soaring. But Neilson said the council could not take into account any fluctuations beyond the cut-off date.

The only question is what was the value on July 2, 2018 and if this has gone up or down [since) is irrelevant.

In Woodstock, the gentrifying former working-class neighbourhood just south of the city, prices have dropped between 15 and 20% according to Manny Sancho, the owner of the local niche agency Olive Properties.

Rates will increase by 53.8% in Lower Woodstock, still the poorer part of the suburb, and by 92.8% next door in Salt River. The semi-industrial area with its rows of rundown terrace houses has increasingly become home to offices for creatives, along with hipster cafes and craft stores, and faces the highest rates increases of the whole metropole.

Ben Esbach, a director at Rates Watch, said it was an inevitable consequence suffered by poor areas that saw an influx of development, particularly if zoning regulations allowed for high-rise apartments and office blocks.

If properties have been bought out at high prices by developers, the fact that you are sitting in a house that has that potential to be sold at such a price will drive up rates. If they are putting up skyscrapers that will have an impact on the value.

So if people just want to stay because they bought there long ago and they like the area or their kids are in the school, they will find themselves paying more, and some of them may leave. It is sad. But it not happening only in Salt River. There are many Salt Rivers in the country.

University Estate, Woodstock and Salt River’s more middle class neighbour, has not seen a single high-rise development and rates here will remain flat. Bishopscourt, an enclave of old money and embassies, is equally fortunate with rates dipping by 0.64%.

Bevan Lucas, the chairman of the Woodstock Residents Association, says there are plans to petition the council because paying 50% more could prove the tipping point for old-time residents who could not absorb another increase on top of water and electricity tariff increases and levies.

For the old and infirm and low income families this will be a blow. They already have to pay more for food and transport and the other social services the city provides. They may find themselves forced to leave, he said.

This is absolutely going to change the nature of the community.

If Woodstock and Salt River were once home to textile and clothing workers, many residents now work in hospitality where wages or salaries are not very high either, Lucas pointed out, and the young professionals who sought first-time homes to buy or rent will also have to look elsewhere.

He said landlords would inevitably recover rates increases from tenants through higher rent and this would affect students, but also pensioners in rented cottages. The elderly who do own their own homes can qualify for rates exemptions, with scaled concessions for those with a monthly income of less than R15,000.

But it is not automatic. You have to apply and they will look at your finances, so there is a means test, Lucas added. It will be interesting to see how the city applies that means test and how much relief they offer.

Neilson said since the city was bound by data from the deeds office when doing valuations, it decided to mitigate the impact of the property market on rates by lowering the randage – the cents charged per rand of a residential property’s value – downwards so that while total valuations increased by 34%, rates would rise by only 23%.

This was further tweaked by increasing the portion of the value of a property on which no rates apply from R200,000 to R300,000.

As a result,19% of properties will not be paying any rates and 42% will be paying lower rates.

The net result is a positive bias towards poor areas and a real increase in overall rates revenue for the council of only 5%, he said, calling it among the lowest countrywide.

I think only Johannesburg is lower but that it is in part subsidised by the bigger business area of the CBD.

A senior DA party source said it was unfortunate timing that the increases were tabled in the run-up to the May general election where the party fears it will be shunned by voters sympathetic to ousted mayor Patricia de Lille who has formed the GOOD party.

But to somehow seek to delay it, would have been dishonest.

The African National Congress’s Xolani Sotashe, the official opposition leader in council, accused the DA of being deeply dishonest by introducing a lower randage rate in an election year because it could readily increase it again in the next financial year.

They are pretending that they are gifting voters now, but they will punish them in the outer years. Come January, they can simply call a special council sitting and say they overestimated revenue and the figures have to go up again. They know that under the Municipal Finance Management Act they can do an adjustment budget, so we run the risk of hearing a different tune in January.

Neilson conceded that the randage rate was adjusted annually.

Sotashe said rich and poor Capetonians alike were justifiably furious at rates increases imposed by a council that holds strong cash reserves and, in the controversy of the moment, is fighting claims it over-recovered water revenue during the worst drought in living memory.

They want to use the high valuations to milk people. The rates increases in Bo-Kaap and Salt River is nonsense. These are working-class areas. The rich should be subsidising the poor but if you at look at this, the poor is subsidising the rich.

He went on to accuse the council of enabling property development through tax breaks while driving the working class further away from the inner city.

They are implementing gentrification. If those people cannot pay they will threaten them, they will disconnect their services and they will take them to court, so that they must leave. I am not saying the people who live in Camps Bay and Llandudno must be punished, but there must be a balanced approach, and the links between property developers and the political principles of the DA must be investigated.

Author – Emsie Ferreira
Source – IOL

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