The property base of the City of Johannesburg has increased 12% to R1.59-trillion in the past five years, paving the way for possible rate and tax increases for the metro’s 6-million residents.
Residents are already hard-pressed, struggling to recover from the national Covid-19 lockdowns and load-shedding. They have also been complaining strenuously about the council’s poor service delivery.
But while residents are loath to suffer possible rate and tax increases, the 12% escalation could come as good news to the city’s treasury, which is struggling to balance its books.
Revenue collection in the metro, which has a budget
of R77.3bn for the 2022/2023 financial year, fell to 86% in October 2022, translating to more than R500m of under-collection.
Municipal valuer Piet Eloff, who handed over the general valuations roll for 2023 to acting city manager Bryne Maduka on Tuesday, said tariff increases would be decided by the metro when it embarks on its budgeting process in March or April.
The metro is under financial strain, which the previous DA-led council attributed to the metro’s failure to approve a R2bn short-term loan facility from the Development Bank of Southern Africa (DBSA) in November 2022.
The council has since been replaced by a coalition government of the ANC and other smaller minority parties. The coalition, which stifled the approval of the R2bn loan, now says it will actively work to have it approved.
The Ekurhuleni and Joburg metros were in the red by more than R2bn in September 2022 and were struggling to pay staff and service providers.
Speaking to Business Day after handing over the roll to Maduka, Eloff downplayed the impact of the increase on property owners and businesses.
“It doesn’t necessarily mean someone is going to pay 15% more [in municipal rates and taxes] because residential property increased by 15%,” he said.
“We value each and every property in the City of Joburg. That value will be used from July to rate that property.
“The city still needs to decide what tariff the property will be rated on, that will determine the effect on the owner.
“The tariffs will be determined around April when the city finalises its budget and modelling and all of that.”
But Saxonwold and Parkwood Residents Association chair Bill Haslam disagreed with Eloff, saying significant rate and tax increases were imminent.
Property base ‘probably incorrect’
“If property value goes up, you pay more in rates and taxes,” Haslam said. He suspected the increase in the metro’s property base to R1.588-trillion was “probably incorrect because of the economic situation in SA, especially here in Joburg”.
“A lot of people are semigrating to the Cape; they are selling their houses. It’s a buyers’ market [and] property prices have gone down significantly,” Haslam said.
The Joburg metro had 934,652 properties at July 1 2022, including residential, business and commercial properties and vacant land.
According to Eloff’s presentation, the residential category alone accounted for R1.054-trillion, followed by business and commercial at R419.6bn, vacant land R34.8bn, and the other properties category of R79.6bn.
“The average valuation of a freehold residential property is just over R1.3m compared to general valuation 2018 [when it was] just over R1.1m,” said Eloff.
The average valuation of a residential sectional title is under R1m, compared with under R970,000 in 2018, he said.
The most expensive business property in the metro was valued at R10.1bn, while the highest-valued residential property was R418m, meaning there is someone in the metro who owns residential property worth almost half a billion rand.
During the compiling process of the general valuations roll, Eloff said his team encountered “some challenges” that the city needs to work on.
Redevelopment
“The city has unproclaimed townships that are fully developed. However, they can’t be proclaimed for one reason or another. The proclamation could substantially increase registered properties in the city,” he said.
Before a township is developed by the municipality it needs to be proclaimed, meaning it needs to be registered in the city’s official records so that municipal services including water, electricity and sewerage infrastructure can be provided.
A proclaimed area also assists the municipality in budgeting for its socioeconomic developmental needs.
“There are areas that need to be relooked at from a redevelopment point of view.” Eloff said. They include the Joburg, Roodepoort and Randburg CBDs.
He said there was a low response to requests for information, and his team encountered “illegal use of properties”.
The valuation roll will be advertised in newspapers on February 8 and published in the provincial gazette on February 15. It will be open for inspection and objections until March 31.
The roll will be available on the metro’s website during this period. It will be implemented on July 1.
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