What's interesting is the fact that the Bill will compel South Africa's 284 local authorities not to tax the first R15 000 of the value of all residential properties. This may be increased from time to time to reflect inflation. Part 2 of the bill deals with levying rates. Here provision is made for rates policies that may assess different rates on different categories of property. The bill provides for rebates to certain properties (or types of properties) and/or exempts certain properties (or types of properties) from rates as long as clear criteria are laid down. The bill also provides a list of possible rateable properties.
Before enacting or amending its rates policy, a municipality must consult with the community. They should publicise the fact that they require the community's input and must make the draft policy available for public comment. Rates policies must be reviewed annually and a public register of properties (that indicate the details and improved value of each property and the concessions that apply) must be drawn up. A registered valuer must be appointed to prepare the roll.
Property must be valued according to a "generally recognised valuation process, method and standard" such as physical inspection of the property, "comparative, analytical and other systems or techniques...including aerial photography and computer assisted mass appraisal systems or techniques. If there is insufficient market data available for any category of rateable property, then that property may be valued in accordance with "any mass valuation system ... appropriate in the circumstances, including ... (one) based on predetermined bands of property value and the designation of properties to one of those bands on the basis of minimal market related data".
Section 9 of the bill provides that "A rate on property which is subject to a sectional title scheme must be levied on the individual sectional title units in the scheme and not on the property as a whole." This has an important outcome when read with section 22 which states:
- A rate levied by a municipality on a sectional title unit, is payable by the owner of the unit.
- A municipality may not recover the rate, or any part of it, from the body corporate controlling a sectional title scheme.
- A body corporate controlling a sectional title scheme may not apportion and collect rates from the owners of the sectional title units in the scheme.
Neville Schaefer, CEO of Trafalgar Property and Financial Services writes on Property24, "The new law will mean that owners can now concentrate on building up their financial strength and upgrading their properties - although they will probably face another two to three years of higher risk after the Bill is enacted while local authorities value sectional title units and load them onto their billing systems."
Finally, the bill stipulates that local authorities may not exercise their power to levy property rates in a way that would materially and unreasonably prejudice national economic policies, economic activities across its boundaries and the national mobility of goods, services, capital and labour.
Local Government: Property Rates Bill: Draft