Sapoa worried about inconsistent property valuations

There is much talk in South Africa about creating jobs and widespread acknowledgement that the primary driver of job creation can only be small business.  The Cabinet has recently been expanded to include a Minister specifically to deal with small business.

You have to create an environment where small business stands the greatest chance on thriving.  There is a lot of focus on draconian labour laws but there is so much other red tape, levies, duties, tariffs, legislation, etc. that operate as a handbrake to small business (instead of an accelerator).

The other day I saw a great suggestion (I can't recall where) that basically suggested that the Rule of Parliament should be that for every one piece of legislation passed, two pieces of legislation must be repealed.

The simplification of billing by Municipalities could greatly benefit everyone and maybe Municipalities should set a goal of cutting their complicated billing structure by 50% in 2 years. 


Gareth Shepperson
Commercial and Property Attorney

Sapoa worried about inconsistent property valuations

Inconsistent rates increases and property valuations by municipalities in South Africa's metropolitan councils have come in for criticism from the SA Property Owners' Association (Sapoa).

The association, the voice of the commercial property sector, claimed yesterday that annual increases in municipal rates and taxes had resulted in 4 500 job losses and about R2.8 billion in lost economic output.

Sapoa has this year appointed specialist consultants Rates Watch, in partnership with the University of Pretoria, to investigate municipal budgets for the coming year.

The association announced the findings of this research at its convention in Cape Town yesterday.

Neil Gopal, Sapoa's chief executive, said that the goal was to identify key municipal budget information on property-related costs, such as rates and taxes, electricity and water in South Africa's 11 largest municipalities.

Gopal said the most striking observation reported was possibly the inconsistency of property valuations, especially in the residential sector, where properties were most often undervalued.

'The net result is to increase the ratio paid by commercial and industrial properties. Effectively, owners of accurately valued properties end up paying too much.

'Sapoa wants to be sure municipalities are delivering an equivalent amount of services to their commercial and industrial property sectors,' Gopal said.

Gopal said the ratio of rates and taxes varied widely across the country. Although a ratio of 2:1 to 3:1 on the tariff for business and commercial properties was found, when compared to residential properties, the highest ratio in the research by Rates Watch had been 5:1 in Mangaung, he said.

Gopal said these ratios were the effective ratios after taking into consideration the rebates for residential property.

'Sapoa's key concern is to ascertain whether or not these high rates and ratios inhibit South Africa's economic policies, something prohibited by the constitution.'

Gopal said the mediumterm growth in property rates in the major metropolitan regions had ranged from 4 percent to 11 percent a year over the past four to five years, with the weighted average growth in property rates at 6.7 percent a year.

'The highest increases were seen in Nelson Mandela Bay at over 11 percent, followed by Mangaung at 10.97 percent and Tshwane at 10.75 percent,' Gopal added.

The lowest increases were in eThekwini at 4.3 percent, Polokwane (5 percent) and Ekurhuleni (5.6 percent).

He said: 'We see this study as the beginning of a process to engage with the Department of Co-operative Governance and Traditional Affairs [Cogta], under which the jurisdiction of the Municipal Property Rates Act vests. We look forward to constructive engagement with Cogta and its newly appointed Minister Pravin Gordhan on municipal rates and other issues that impede the property sector and ultimately economic growth and jobs.'

Business Report


Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!