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If you don’t live there, cough up!

Cape Town rates policy sneaky on holiday homes.

The City of Cape Town’s draft rates policy in a very sneaky way excludes holiday homes and residential rental units from being categorised as residential property for the purposes of paying property rates.

As a result owners will be required to pay more than double the rates than they would have, if the property were their primary home.

This has been hidden in the city’s rates policy since 2014/15, but it seems few investors are aware of it, says RatesWatch director of valuations Ben Espach.

Espach questions how the city is able to distinguish between primary and secondary homes and apply the policy consistently to all property owners.

Moneyweb is aware of one owner who lives abroad and has been billed for property rates on his home in Cape Town at the non-residential rate. He is appealing the matter and has appointed an advocate to represent him. No date has yet been set for the hearing.

The draft policy is contained in a 31-page Annexure to the city’s draft budget. Stakeholders have until May 4 to submit comment on the documents.

Nowhere in the 31-page document does the city spell out the categorisation of properties for rating purposes.

It does not make it clear that secondary homes would be rated at a much higher rate than primary homes.

It is only when one reads three definitions contained in the draft policy together, that the real intention becomes clear, says Espach.

Espach says read together, these boil down to the same definition that was contained in the Municipal Property Rates Amendment Bill, 2011.

It read:

Due to huge opposition from stakeholders this exclusion was removed before the amendments were enacted in 2015.

In the current draft policy non-residential property is defined as “all other properties other than those defined as residential” and including vacant land.

These properties are rated at a ratio of 2:1 to the rate of residential properties.

If the policy is adopted in its current form, secondary residential properties would in addition not qualify for the rebate which exempts owners from paying rates on the first R200 000 of the valuation of residential properties.

The definition provides that this category “could be further refined in terms of commercial and industrial properties” in the rates policy, but it is quiet about secondary homes and residential rental properties.

Espach says prospective investors might refrain from buying additional residential properties in Cape Town if they take the increased rates bill into account, which could seriously impact the residential property market.

He criticises the city for not communicating clearly which property categories they provide for and says punitive property rates could negatively impact on the viability of investments and ultimately on the value of such property in Cape Town.

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another good reason not to buy in
La La Land

….or to vote for these DA goons again…

Says a lot about a person that only complains and offers no credible alternatives…

oh go tap your raintank you pillock

Sadly the alternatives include bigger goons, clowns and racists (EFF of course).

Lesson: Bureaucrats will pull a fast one on you Mr/Ms Taxpayer, regardless of the colour of their T-shirts. The DA is just the ANC-Light.
The big cities are all being overwhelmed by the influx of rural poor seeking a better life.
The small towns have all been abandoned by the middle class, robbed empty by the executive mayors and their Range Rover driving hangers-on. And the infrastructure completely destroyed.
Where to hide? Maybe in medium sized towns with an agricultural economy and a little bit of tourism?

Sobering thoughts…and behind every government ‘policy’ is another wealth tax, this is not going to end well…

Exactly My thought process for some time, have now focused on George on the Garden route as fits the bill exactly, with more than excellent support medical/ health infrastructure, agricultural and tourism and the best quality of life in the whole country….Plus prices of homes 40-50% less for equivalent of my cape town house so money in the bank as well ,its a no brainier with the amount of handouts-mouths to feed that CT city council has to feed and the exponential expansion

I have always contented that reading is also a skill and apparently cannot be learned afterwards. I am now referring to the writer of the article. From the quoted portions in the article one can clearly see that it does not refer to the owner living there (anymore)……… “Espach says read together, these boil down to the same definition that was contained in the Municipal Property Rates Amendment Bill, 2011.

It read:

Due to huge opposition from stakeholders this exclusion was removed before the amendments were enacted in 2015.

If it has been removed I cannot see how this can be applied,
although it might be applied the whole article if you see the heading is not correct!

Yip, you are correct that reading cannot be learned afterwards. But this does not apply to the writer, but to someone else…
Let’s try:
So the offending 2011 definition was removed.
It was replaced in 2014/15 by the three definitions that achieve exactly the same thing.
Questions?

As is writing?

I am now referring to the writer of this comment…

Like johnbrandow not sure the text has been interpreted correctly in the article. If the article is correct it seems doubtful it is something the City would really intend to apply – the negative impact on affordable housing would seemingly be significant. Landlords would lose their primary rebate and pay higher rates – both of which would need to be recovered from the tenant – so there would be a significant spike in rental prices.

“Landlords would lose their primary rebate and pay higher rates – both of which would need to be recovered from the tenant – so there would be a significant spike in rental prices.”

Maybe rental prices spike in the short term.

But surely the end result would be the exact opposite? Higher rates on a second property means owning to let is more expensive. Therefore less demand for rental property and lower housing prices overall?

Non-primary homes are often let out. The increased rates will be passed on to poor tenants.
Not nice CT!

The author should have asked the City of Cape Town to clarify the situation instead of speculating and scare mongering. Rubbish article!

Ciao Cape Town! So glad I moved away from that overpriced place and never bought there 😉

Non permenant residents use less water and electricity so the Municipality is obviously wanting to make up for this shortfall. As someone has already said, this will mean properties will be rented out and the increase is going to have to be borne by the tenants who are already paying rentals that are excessive due to supply and demand. What a balls up.

Correct and the salaries are rather pathetic in CT. Oh well, time for the hipsters to find a real job in Joburg and leave CT for the tourists

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