The SA Property Owners Association (SAPOA) has applauded the City of Polokwane’s for introducing innovative proposals in its recently-released Draft Rates Policy 2014/15, including a new rate for illegal uses and rebates for high-value properties.
The organisation, which represents the South African commercial and industrial property industry, is however concerned about a proposal to increase ratios on vacant land.
SAPOA’s comments are based on a report commissioned by the association from specialist consultant Rates Watch (Pty) Ltd, which was appointed to analyse municipal budgets for the coming year – with a focus on property-related costs like rates and taxes.
“Rising municipal rates and taxes is a hot-button issue and we believe it to be in the interest of our members to partner with municipalities like the City of Polokwane to find effective solutions,” says CEO, Neil Gopal.
In a bold step, Polokwane is proposing the creation of an “Illegal Use” category, allowing penalty rates to be levied by the municipality.
“This is an innovative suggestion to discourage the illegal use of properties,” says Gopal. “Furthermore, SAPOA is happy to assist the municipality in identifying these properties.”
Another suggestion is to levy a lower rate on land forming part of the remainder of a township. “This is likewise a positive step, as it reduces the holding costs for developers,” explains Gopal.
A further positive aspect of the draft policy is relief for high-value properties. “Business or industrial properties with a value over R50 million will receive a rebate on a rising scale… The higher the value of the property, the higher the percentage rebate,” explains Gopal.
Properties valued at more than R500 million, for example, will receive a 40 percent rebate. Rebates on other types of properties – like sectional title schemes where owners maintain their own internal municipal services – is also on the cards.
SAPOA is clear, however, that a higher rate for vacant land – proposed to increase from 2.0 to 4.5 – will do little more than penalise vacant land. The City argues that a higher ratio will deter land grabs and illegal uses, as well as encourage development.
Not so, says Gopal, pointing out that high rates will not force the development of vacant land.
“SAPOA is pleased with the positive progress we are seeing on these issues and looks forward to continued partnership with the City of Polokwane.”