There is a proposal to amend Section 1 of the Property Rates Act to the effect that all residential property, used to accommodate persons other than the owner for gain, should be charged commercial rates on the property.
This would severely affect the monthly costs of owning property and impact severely on investment buyers; those people who rely on income from their property/ies and ultimately on tenants.
Objections can be lodged before the 22nd July 2011. These can be faxed to (012) 334-4811 or emailed to [email protected]
They have copied their objection below for you to read - if you are also concerned lodge your objection timeously too!!
It reads as follows:
TO WHOM IT MAY CONCERN
Amendment of section 1 of Act 6 of 2004 -
THE PROPERTY RATES AMENDMENTS BILL
Paragraph "o" of the Property Rates Amendment Bill provides for the following definition of residential property:
'Residential property' means property of which the primary use or permitted use is for residential purposes, excluding such property used to accommodate persons other than the owner for gain;''
I assume that residential property “used to accommodate persons other than the owner for gain” will be levied rates at a commercial rate - I therefore hereby record my objection to the above proposed amendment on three grounds:
For many people the ownership of a property which is rented out 'for gain' is specifically geared to provide additional income, either to support themselves and their families and as provision for their retirement years. The government is encouraging the public to save in order to be able to provide for oneself instead of being a burden on the state. If this amendment is enacted these persons will be severely disadvantaged as a result of substantial increases in the rates on these properties, possibly rendering the investment unviable and even unaffordable. Owners of income genera ting properties are already paying additional Capital Gains Tax seeing that they do not qualify for the same exemptions as those for whom their property is their primary residence if and when they sell their properties, and on rentals received, they are paying Income tax.
Many people make provision ahead of time for their retirement years by purchasing a retirement property when they can afford it and rent it out until they are ready to retire. If the proposed amendment is enacted it may well prevent people from making this provision - is the government going to subsidize retirement homes to make them affordable in people's latter years.
Furthermore in the current economic climate it is not uncommon for a property owner not to reside in his own property but rather to rent it out to earn income and reside elsewhere with relatives and contribute towards those household expenses – if this amendment is enacted then in such a situation 2 property owners would have to pay rates at a commercial rate for their properties: The person who could not afford to continue to occupy his own property and the owner of the property that has taken on the boarder as he is now accommodating another person for gain.
- Landlords will have to increase rentals to cover the additional expense which will result in the tenants having to carry the burden. The possibility of these persons renting property ever being able to save money to buy their own homes is further reduced. There is also a strong likelihood that increased rentals at the bottom end of the market will result in those tenants not being able to remain in occupation and ending up homeless – having to resort to informal settlements like squatter camps. Given the lack of housing in South Africa it is bizarre that anything that would lead to an aggravation of the situation would be considered.
- The property market is already in the doldrums, and this proposed amendment will substantially reduce the number of investors of residential property as the additional rates burden will result in substantially reduced returns from these properties.
With all due respect the proposed amendment is unviable and will have major implications for many older people and those who are carefully making provision to support themselves and not being a burden on the State, for those using income generated by or through their properties to support themselves and their families and on those persons who are tenants and who will have to pay higher rentals for their accommodation.