MUNICIPAL PROPERTY RATES ACT

Transcription

1 MUNICIPAL PROPERTY RATES ACT Frequently Asked Questins & Answers Why is there a need fr the Municipal Prperty Rates Act? T regulate the pwer f a municipality t impse rates n prperty (in accrdance with sectin 229(2) f the Cnstitutin); T prvide a unifrm framewrk fr regulating the rating f prperty thrughut the cuntry; T exclude certain prperties frm rating in the natinal interest; T make prvisin fr municipalities t implement a transparent and fair system f exemptins, reductins and rebates thrugh rating plicies that are a prduct f cllective participatin f cmmunities; T make prvisin fr fair and equitable valuatin methds f prperties; T make prvisin fr a fair bjectins and appeal prcess regarding valuatin f prperty; T assist in building ecnmically and financially viable municipalities that are enabled t meet the service delivery pririties f their cmmunities. What are municipal prperty rates? Municipal prperty rates are a Cent amunt in the Rand levied n the market value f immvable prperty (that is, land and buildings). Municipalities have a lng histry f rating prperty in terms f the ld Prvincial Ordinances (f the frmer Cape, Natal, Orange Free State and Transvaal prvinces), especially in the frmerly white urban areas. In additin, the Cnstitutin f the Republic f Suth Africa gives municipalities the pwer t value and rate prperty in their area f jurisdictin. The Municipal Prperty Rates Act replaces the ld system f prperty valuatin and rating based n the ld Prvincial Ordinances. It des nt give municipalities the riginal pwer t rate prperty; it merely seeks t regulate an riginal pwer vested in municipalities by the Cnstitutin. Wh is liable fr the payment f municipal prperty rates? All immvable prperty wners are liable fr the payment f rates. Therefre, all prperty wners, including cmmercial, residential (hmes), agriculture, gvernment, etc, are included in the definitin f prperty. Land tenure rights such as permissin t ccupy (PTOs) cmmnly fund in cmmunal areas, are als included in the definitin f prperty. Municipalities must ensure that unit wners in sectinal title schemes are registered with them because they will n lnger be able t rate the bdy crprate. Hw are municipal prperty rates determined? The financial liabilities fr municipal prperty rates are calculated by multiplying the market value f immvable prperty (fr example, land and buildings) by a Cent amunt in the Rand that a municipal cuncil has determined. Fr example: If the market value f immvable prperty (land and buildings) is R , and The Cent amunt in the Rand is R0.015 (which is 1.5 Cent), then 1

2 Amunt due fr prperty rates = R x = R750 fr the whle year, which means that every mnth the prperty wner will pay R62.5 (this is calculated by dividing R750 by 12 as the year has 12 mnths) t the municipality. If the immvable prperty in questin is used as a residential prperty (hme) r if it is used fr multiple purpses, prvided ne r mre f its cmpnents are used fr residential purpses The Cent amunt in the Rand will be applied after deducting the first R f the market value f such residential prperty (this is a requirement f law thrugh the Municipal Prperty Rates Act), which means that the R0.015 will be applied t R rather than R (that is, R less R15 000). The rates payable by the hmewner will then be = R x = R525 fr the whle year, which means that every mnth the prperty wner will pay R43.75 t the municipality. The Cent amunt in the Rand is decided by the municipal cuncil taking int accunt public cmments/submissins/inputs n the municipal cuncil s draft rates plicy and budget that is subjected t the prcess f cmmunity participatin in line with Chapter 4 f the Municipal Systems Act and the Municipal Finance Management Act. Des the Municipal Prperty Rates Act require that bth land and buildings be valued and rated? Yes, the Act mandates that bth land and buildings be valued tgether fr the purpses f impsing a single Cent amunt in the Rand n them. The practice f sme municipalities f valuing and rating land nly r valuing land and buildings separately (based n the ld Prvincial Ordinances) in rder t impse different Cent amunts in the Rand n them will n lnger be applicable in terms f the Act. This is imprtant t ensure equitable treatment f prperty wners. Hw will the Municipal Prperty Rates Act affect prperty wners? The critical determinant f hw much prperty wners will pay is the amunt in the Rand each municipal cuncil will determine fr the varius prperty categries. The Act des nt change the ttal revenue needs f municipalities, nr des it set the Cent amunt in the Rand. Each municipality will cntinue t set and cllect prperty rates in an amunt sufficient t meet its needs, taking int accunt the likely impact f rates n lcal ecnmic develpment, ratepayers and their ability t pay such rates. Each municipality will have t prperly manage the transitin frm its ld rating practice t the new system based n the Act. All things being equal, municipalities that have nt been rating n the market value f land and buildings cmbined, shuld cnsider reducing the Cent amunt in the Rand drastically t ensure that there are n majr shcks t ratepayers and ecnmic sectrs given that in terms f the Act, they will be raising revenue frm an expanded rates base than befre. Als, fr all municipalities, when new valuatins are dne, frm time t time, the Cent amunt in the Rand shuld be reviewed, and if necessary reduced drastically t avid creating majr shcks t ratepayers. Fr example, if the municipality was raising ttal rates incme f R frm residential/cmmercial prperty categry based n rating land, whse rates base was wrth R (ttal market value f all individual prperties within the residential/cmmercial prperty categry), and the new rates base, which is land and buildings, is wrth R in market value, the municipality wuld have t drastically reduce the cent amunt in the Rand, frm abut R0.029 t abut R

3 Des the Municipal Prperty Rates Act cntain checks and balances t prtect prperty wners? Yes. The act cntains checks and balances t prtect prperty wners. The Minister fr Prvincial and Lcal Gvernment, with the cncurrence f the Minister f Finance, can limit the Cent amunt in the Rand that municipalities impse, if such prf can be prvided that such a Cent amunt in the Rand n specific categry f prperties is materially and unreasnably prejudicing natinal ecnmic plicies, ecnmic activities acrss municipal bundaries r the natinal mbility f gds, services, capital r labur. Any sectr f the ecnmy, after cnsulting the relevant municipality r municipalities and rganised lcal gvernment, may, thrugh its rganised structures, request the Minister fr Prvincial and Lcal Gvernment t evaluate evidence t the effect that a particular Cent amunt in the Rand n any specific categry f prperties, r a rate n any specific categry f prperties abve a specific Cent amunt in the Rand, is materially and unreasnably prejudicing any f the matters mentined abve. The Act als prvides fr the Minister fr Prvincial and Lcal Gvernment, with the cncurrence f the Minister f Finance, t set an upper limit n the percentage by which rates n prperties r a rate n a specific categry f prperties may be increased. The Act prvides fr the MEC fr Lcal Gvernment in a prvince t mnitr whether municipalities in a prvince cmply with the prvisins f the Act, including Ministerial decisins n the issues mentined abve. What is prperty rates revenue used fr? Municipalities need a reliable surce f revenue t prvide basic services and perfrm their functins. Prperty rates are the mst imprtant surce f general revenue fr municipalities, especially in develped areas. Revenue frm prperty rates is used t fund services that benefit the cmmunity as a whle as ppsed t individual husehlds. These include installing and maintaining streets, rads, sidewalks, lighting, and strm drainage facilities; and building and perating clinics, parks, recreatinal facilities and cemeteries. Prperty rates revenue is als used t fund municipal administratin, such as cmputer equipment and statinery, and csts f gvernance, such as cuncil and cmmunity meetings, which facilitate cmmunity participatin n issues f Integrated Develpment Plans (IDPs) and municipal budgets. Municipal prperty rates are set, cllected, and used lcally. Natinal and prvincial gvernments d nt have the pwer t levy rates, nr d they share in the revenue cllected. Revenue frm prperty rates is spent within a municipality, where the citizens and vters have a vice in decisins n hw the revenue is spent as part f the Integrated Develpment Plans (IDPs) and budget prcesses, which municipalities invite cmmunities t input prir municipal cuncil adptin f the budget. Des the Municipal Prperty Rates Act prvide fr any exclusins frm rating? Sectin 229(2) f the Cnstitutin prvides fr natinal legislatin t regulate municipalities pwer t levy prperty rates. In terms f the Act, certain exclusins frm rating are made. These include: The first R f the market value f residential prperty; Land refrm beneficiaries prperty, fr 10 years, prvided that the prperty des nt change hands; The first 30% f the market value f publicly cntrlled service infrastructure as defined in the Act; The right t prspect fr minerals; 3

4 Prperty registered in the name f and used primarily as a place f public wrship by a religius cmmunity, including the assciated fficial residence ccupied by an ffice-bearer f that cmmunity wh fficiate at services at that place f wrship; Parts f special nature reserves, natinal parks, nature reserves r btanical gardens within the meaning f the relevant legislatin, except where cmmercial activities take place within them; Any island f which the State is the wner. Des the Municipal Prperty Rates Act make prvisin fr municipalities t grant exemptins, rebates and reductins? In terms f the Act municipalities may prvide fr exemptins, rebates, and reductins in their rates plicies based n lcal cnditins and circumstances. The cst f such lcally determined exemptins, rebates, and reductins must be cnsidered by the municipal cuncil in relatin t the benefit received by the lcal cmmunity frm such relief measures. Fr purpses f granting exemptins, rebates, and reductins in respect f wners f categries f prperties, such categries must include the fllwing: Indigent wners; Owners dependent n pensins r scial grants fr their livelihd; Owners temprarily withut incme; Owners f prperty situated within an area affected by a disaster within the meaning f the Disaster Management Act (2002); r any ther serius adverse scial r ecnmic cnditins; Owners f residential prperties with a market value lwer than an amunt determined by the municipality; r Owners f agricultural prperties wh are bna fide farmers Hw des the Municipal Prperty Rates Act treat newly rateable prperty? The Act requires that the rating f newly rateable prperty be phased in ver a perid f three r fur financial years depending n the use and wnership f prperty. Newly rateable prperty is any rateable prperty n which prperty rates were nt levied befre the end f the financial year preceding the date n which this Act tk effect, excluding prperty that was incrrectly mitted frm a valuatin rll and fr that reasn was nt rated befre that date. What must municipalities d t implement the Municipal Prperty Rates Act? Municipalities are required t: Develp rates plicies Strengthen internal capacity t cnduct valuatins Prepare general prperty valuatin rlls Cnsult the cmmunity n their draft rates plicies 4

5 Adpt rates plicies Adpt by-laws t give effect t the adpted rates plicies Gazette the prperty valuatin rlls fr public inspectin utlining als the prcess f raising bjectins Outline t the public the appeal prcess regarding utcme f bjectins What must ratepayers d t effectively participate in the implementatin f the Municipal Prperty Rates Act? Chapter 4 f the Municipal Systems Act requires a culture f cmmunity participatin in the affairs f the municipality t be develped. Ratepayers have gt a respnsibility t engage with their municipalities when municipalities invite public cmments/submissins/inputs n their prpsed rates plicies and budgets. The rates plicies deal with issues such as the Cent amunt in the Rand that the municipal cuncil prpse impsing, relief measures t ratepayers such as granting f exemptins, rebates, and reductins in respect f wners f categries f prperties, fr example, t Indigent wners; Owners dependent n pensins r scial grants fr their livelihd; Owners temprarily withut incme; Owners f prperty situated within an area affected by - a disaster within the meaning f the Disaster Management Act (2002); r - Any ther serius adverse scial r ecnmic cnditins; Ratepayers shuld cmply with municipal requests within the stipulated timeframes that municipalities will publicly annunce regarding inspectins f prperty valuatin rlls and if necessary ldging bjectins in respect f market values f specific individual prperties. Raising cncerns after municipal cuncils have already apprved municipal rates plicies and budgets r after expiry f the bjectins perid will nt achieve meaningful results. Cmmunities need t practively and cnstructively engage with their municipalities n valuatin and rating issues. Hw t ldge bjectins regarding the determined market value f the prperty After a municipality has cmpleted its valuatin f immvable prperties within its jurisdictin and prduced a prperty valuatin rll, the municipality invites members f the public t inspect the prperty valuatin rll within a stipulated timeframe, and t raise bjectins within a stipulated timeframe. The municipality als frward each immvable prperty wner with an extract f the prperty valuatin rll pertaining t that wner s prperty. Shuld the immvable prperty wner be nt satisfied with the market value f his/her prperty reflected in the prperty valuatin rll, such immvable prperty wner shuld apprach his/her municipality t ldge bjectins citing reasns behind such bjectins. 5

6 The law requires that the bjectr cntinue paying rates while his/her bjectins are being prcessed and finalised. On finalisatin f the cnsideratin f bjectins, if there is evidence that the market value reflected n the prperty valuatin rll is wrng, the law requires the municipality t crrect the situatin, and where such crrectin results in rates refunds t the ratepayer, the municipality is bliged t refund the ratepayer. In a case where the ratepayer s prperty was undervalued, the ratepayer is bliged t pay the additinal rates t the municipality. Kindly take NOTE Hereunder is nt the final RATE, it is nly a prpsal t Cuncil fr apprval r amendment tgether with the draft budget f 2008/09 in their meeting f 29 May 2008, after public participatin prcess n the issues. This nly applies t residential prperty categry: Value f prperty R x / 12 35% rebate = new mnthly tax payable Please nte that this is nly a prvisinal rate as recmmended by the budget ffice, and can still be amended befre implementatin date f 1 July This rate has t be apprved by Cuncil in their meeting at the end f May after the public participatin prcess that is t take place frm 1 April