April 23 2025 16:55
CAPE TOWN, SOUTH AFRICA
Cape Town homeowners are gearing up to challenge the City’s proposed new municipal tariff structure, which will be implemented on 1 July.
They have until May 2 2025 to submit their input on the City’s proposed budget for 2025/26. This budget includes new tariff proposals for homeowners based on property values, which will lead to significant increases in property rates.
The proposed tariff structure introduces fixed charges for water, sanitation, and also a city-wide cleaning tariff, all of which will be determined based on property value. At present, the fixed charges for water and electricity connections are uniform across all households. Cape Town’s house prices have ballooned in recent years while those in other South African metropoles have been slow to move on average and in real terms net of inflation.
Research by the South African Property Owners’ Association (Sapoa) has shown that homeowners are right to be concerned. The organisation said earlier this month that the draft 2025/26 which was out for comment had issues. Property rates were set to climb at above-inflation levels. The draft budget proposed an average increase in property rates of 7.96% with fixed water charges to be determined by property value.
SAPOA says it has addressed urgent correspondence to the executive management of the City of Cape Town, about its concerns regarding the proposals, including the above-inflation rates increase, which it notes is unsustainable and contrary to National Treasury Guidelines.
It said the methodology for calculating fixed water and sanitation charges based on property value “offends the prescripts of the applicable legislation which provides that, in general, the amount paid in respect of services are to be in proportion to the usage of that service”. It said that the cleaning tariff was “especially problematic”.
This is concerning given that the City of Cape Town is largely praised by business operators as opposed to other local municipalities.
“SAPOA has been advised that the proposed tariff constitutes a tax, and that the municipality is not entitled to raise further taxes without the authorisation from the Minister of Finance, which has to be published in a regulation,” Sapoa said.
“While it is indeed so that electricity increases are substantially lower than the increases allowed by the National Energy Regulator of SA (NERSA), the fact is that the other tariff increases and changes are improper, and that there is no legal basis for their implementation,” it said.
Some residents are worried that their municipal bills will climb between 20% and 40% in areas not only on the luxury Atlantic Seaboard but also in Gardens in the City Bowl as well as parts of the southern suburbs. Many people who bought their properties decades back might be retired now and unable to earn revenues growing at high rates.
The Cape Town Collective Ratepayers’ Association (CTCRA) has distributed an online petition to object to the city’s draft budget for 2025/26.
Reasons include the rate increases, excessive increases over the years and a possible breach of the Municipal Systems Act.
The City of Cape Town plans to spend more than R30bn on infrastructure over the next three years, compared with the R24.3bn that the City of Johannesburg will spend over the same period. The City has said its new tariff proposals are defendable as its property rates are still the lowest per R1m across South Africa’s metros.
alistair@propertyflash.co.za