Rates hike leave residents out of pocket and not happy

An outcry against huge increases in rates bills has meant the Council must now re-look at the formula used to determine monthly rates.
Business and property owners who contacted the Courier said they were stunned to discover that their July rates bill reflected increases, in one case, of 116%.
Other increases varied from between 36% to well over 100%.
Landlords said the ‘out of the blue’ rates hike would force them to simply pass on the increases to tenants and the domino effect could force businesses to retrench staff to cut costs, and in some cases, shut shop.
An urgent meeting at the Municipality last week attended by Mayor Richard Mbatha, Councillors Raubenheimer, Mahaye, Mdluli and Xaba and municipal officials brought into sharp focus the level of disgruntlement.
Charl Jacobs of HSK Simpson, who completed the re-evaluation of all 14 000 properties in Endumeni, explained that this is done every five years. “Valuations are done according to set standards and all properties are inspected and we take into account the market evidence i.e. what the properties in the area were sold for.”

“However, because of the new valuations, instead of a general 7-8% rates increase which Council was hoping for, we got increases that are clearly untenable.

There were around 284 objections to the valuations of which around 200 were considered as ‘true objections’ and attended to. Councillor Raubenheimer, who himself is in the property business, pointed out that ‘the problem is not about the valuations (of properties) but rather the formula used to determine rates’.
“Because of the new valuations, it was decided to drop the formula from 0,04004 cents in the Rand to 0,0399 cents in the Rand.
“However, because of the new valuations, instead of a general 7-8% rates increase which Council was hoping for, we got increases that are clearly untenable.
“I know of a local business whose property valuation was around R9-million with which the owners were happy with but whose rates went up from R11 000 a month to R27 000 a month.
“No business on earth can survive such a hike and clearly, Council must intervene to prevent a crisis that will lead to unemployment and empty shops.”

Vryheid is around 35% cheaper than Endumeni

Mayor Mbatha and Councillors Mdluli, Mahaye and Xaba echoed his thoughts. Councillor Mdluli pointed out that a few years ago there had been a similar outcry in Richards Bay which saw residents paying more rates than in the exclusive areas of Cape Town.
A comparison with rates between Vryheid and Endumeni revealed that a business property valued at R1-million in Vryheid attracted rates of just over R20 000 per year while in Endumeni the figure is now R35 000.
In Vryheid, the rates tariff for businesses is 0.02 cents in the Rand compared to 0.039 here.
Councillor Raubenheimer pointed out a further anomaly over the rating of vacant land.
The rates bill for a vacant lot he cited increased 89% to R1700 a month while adjacent properties on which there were three bedroom houses paid just over R600 a month.
Acting Chief Financial Officer, Bongani Mdletshe, said the ‘situation was quite unusual as residents were happy with the new valuations of their properties but not with their bills’.
It was said that legislation prevented the municipality from adjusting the formula and/or tariffs until the adjustment budget in January.
It was recommended that the conundrum is now sent back to Council to debate further and come up with a solution to save the town from a possible meltdown because of the huge increases in rates.

  AUTHOR
Terry Worley
Editor

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