Rates relief welcomed in major cities

Property owners in Johannesburg, Cape Town and Durban have been granted rates relief, softening the economic blow of COVID-19. That’s the good news. The better news is that the benefits apply to a range of ratepayers, from residents to businesses.

Different cities, different solutions

At the end of July 2020, deep into the national COVID-19 lockdown, The City of Johannesburg announced a rates relief package that, in effect, put R400 million back into the collective pockets of the city’s property owners. In a statement, the city’s finance MMC, Jolidee Matongo, confirmed that the relief includes the waiving of penalty interest charges on defaulting municipal accounts for the period between April and June 2020. The municipality also said it would waive penalty interest charges for defaulting accounts.

By this time the City of Cape Town had already revised its 2020/21 budget to include service relief packages, setting aside R3 billion for a rates and service relief package for indigent, disabled and pensioner residents.

There was good news in Durban, too, where eThekwini Municipality approved its own COVID-19 special one-off payment relief incentive for customers whose accounts were in arrears.

Smaller homes see most relief

So who were the big winners? The headline winners in Cape Town were the poor. ‘If your property value is below R300,000, or household income is below R4,500, you will get no less than a 100% property and refuse rebate, 10.5 kilolitres of free water, 7.35 kilolitres of sanitation, and 60 kilowatt-hours of free electricity, if your consumption is kept low,’ said Cape Town Mayor Dan Plato. ‘We know that many have already lost their jobs or fallen on hard times. That’s why we are raising the indigent threshold to R7,000 income per month, and increasing the rates discount for many in this category.’

In Johannesburg, meanwhile, the CoJ approved a blanket one-off rebate, with relief provided to 806,959 properties. The CoJ temporarily increased the threshold for rates from R350,000 to R600,000 for the three-month relief period, with rebates loaded automatically during the August billing cycle.

According to the City of Johannesburg’s criteria for multipurpose residential property owners to apply for the rates relief rebate, the applicant’s property value must be equal to, or less than, R20 million.

Some respite for businesses

Businesses in Johannesburg have to apply for their rebate, and must ‘provide financials before COVID-19 and during COVID-19’. Only businesses with up-to-date municipal accounts will be eligible for this relief, and businesses that remained in operation while the rest of us were stuck at home do not qualify.

Cape Town’s commercial property owners will also have to prove that their business income has been negatively affected by the COVID-19 crisis, and even then the best they can hope for is an arrangement to pay off their rates (interest-free) over an agreed period of time.

In Durban, eThekwini Municipality spokesperson Msawakhe Mayisela said that B&Bs and guesthouses would receive a COVID-19 rebate to bring their rates payable to the same level as those of residential properties.

Municipalities take the blow

The benefits of these rates relief efforts will depend on the city you live in, the value of your home, the extent of your loss of income, and the nature of your property. But every bit helps. For the municipalities involved, it appears to be a case of trying to get what they can out of their economically battered ratepayers.

The City of Johannesburg has openly admitted that collection levels have ‘shown a steep decline’ due to lockdown measures. The foregone rates will obviously put a dent in their budgets, but the municipalities’ losses – while significant – will be bearable. The CoJ’s R400 million-odd relief package, for example, works out to about 3% of the R13.1 billion in property rates it expects to receive this year.

The question now is: How do they plan to gather the remaining 97%?