Numerous real estate owners canvassed at the South African Property Owners’ Association (Sapoa) 2022 annual convention held at Sun City in the North West Province, from September 28 to 30, said they would support a rates boycott.
These tended to be medium-sized companies and small businesses as well as individuals who owned commercial property portfolios. They said they were fed up with poor municipal service delivery and felt that their rate money was being wasted.
“I think many a property owner is pissed off. It feels like negotiations between the private and public sectors are so protracted and mostly ineffective,” said an owner.
He said the money which would be paid to municipalities, should be placed in legal trust accounts leaving a hole in those municipalities’ budgets. This would hopefully force municipalities and other public sector departments to up their service game.
Large, multinational, real estate investment trusts (Reits) were less likely to support a rates boycott or withhold portions of their rates as they couldn’t risk legal challenges and reputational risk.
Sapoa is conducting a study to track the effects of excessive rises in rates and taxes on companies’ profit lines, ability to retain and hire staff, on individuals and society overall. High rates and taxes increases can prompt business owners to flee the country.
Sapoa has been speaking to municipalities for years about rates increases and other problems which cause headaches for its members. It is trying to solve impasses between municipalities’ valuations of properties and the property owners’ valuations, for example. Often groups will overvalue large properties which are soft targets like Sandton City and Eastgate Shopping Centre, in order to collect higher rates.
But, at the Sapoa convention, Andile Mnguni, acting chief operations officer of Dube TradePort, said in a presentation on Thursday September 29, that municipalities were finding they had to raise rates especially when properties changed hands as their revenue collection was inadequate to support their projects.