The City of Johannesburg (CoJ) has given property owners over R2.2 billion in rebates in the last financial year in an effort to offer business and property owners a reprieve in a tight economy, the city confirmed in a statement on Tuesday.
It says this is part of plans to strive towards a “business-friendly city” as tariffs remain relatively low.
The rebates announcement comes a week after the city decided to terminate services to properties and ratepayers that were in arrears.
The CoJ claimed that of the R38 billion in unpaid rates, taxes and levies owed to it by business owners and residents, Sandton City owed it the highest amount of R158 million. The super-regional mall however refuted these claims in a statement to Moneyweb saying that all its accounts are in order.
Sandton City has since said it is in discussions with CoJ to address any mismatches.
Using rates to keep businesses in business
According to Sihle More, a group head for property in the city, the municipality seesks to use its rates policy to ensure that businesses retain facilities and remain operational.
She noted in the statement that the city is aware of the impact of Covid-19 and the weight of the struggling economy on property owners.
“The city understands that the economy is not doing well. There have been petrol price increases, job losses from lockdown, electricity increases, and inflation rise.
“In consideration of the sluggish economy, the increase in rates was kept at a nominal 2% across all categories of properties compared to the CPI increase, which was over 4% during the previous financial year,” says More.
She adds that a lot of inputs from both businesses and homeowners have shaped the city’s rates policy over the years and the engagements have led to the city having a balanced rates policy.
She says the city has gradually reduced the business-to-residential property ratio from 1: 3.5 to 1: 2.5.
Business / residential split?
South African Property Owners Association CEO Neil Gopal tells Moneyweb the R2 billion in rebates will need to be unpacked between the commercial and residential sectors.
“We would question if this [is] indeed a business-friendly city as [the] bulk of the rebates may have been given to residents, ”he said.
“With respect to the 2% rate increase, it is positive; however we will await to see what the new rates increase is for the new financial year. We hope they continue with this below CPI increase for the new financial year as the consequences of Covid-19 will still be felt. ”
He points out that most businesses – large and small – found it difficult to generate income during Covid-19, yet their expenses remained high.
In response to the city’s claim that it will prioritize being a “business-friendly city”, Gopal notes that returning to the basics requires sorting out matters such as attending to potholes, maintaining infrastructure, reducing crime, stopping the unsustainable increase in property rates and so forth.
He is of the view that without these basic elements being in place, the business community is likely to continue to disinvest.
According to the city, pensioners aged between 60 and 69 qualify for a 100% rebate on homes not over R2.5 million in value, however this is dependent on their income bracket.
“If you own property that is [valued at] less than R350 000, you are [exempt from] paying property tax and refuse [removal service charges] on your residential property. More appealing for homeowners is that the first R350 000 of a property’s value is exempt from rates irrespective of the value of your residential property, ”it said.
“There are other rebates the city offers such as rebates for housing for retirement schemes or retirement villages – which are becoming more popular, rebates for unemployed homeowners, protection of animals and heritage properties amongst others.”
The city urged property owners to participate in the upcoming meetings to shape the rates, credit control and debt collection policies.
Palesa Mofokeng is a Moneyweb intern.