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On the back of the South African Reserve Bank voting to hold interest rates where they are for the foreseeable future – driving the nail deeper into many homeowners bond-coffin – the municipal tariff increases for the 2024–2025 fiscal year have now been added to the list of pains.

Surprisingly, Cape Town seems better off than most of the other metros. At a glance at least.

Municipalities compute property rates using a statutory calculation known as the cent-in-rand rate – the rate a person would pay for each rand of property worth is indicated by the formula.

The gurus at BusinessTech did the math for us by comparing the tabled rates to 2014’s, to see just how much the rates of the four major metros, Buffalo City, the City of Joburg, eThekwini, and the City of Cape Town, have increased over the last decade.

Buffalo City has increased its rate by a whopping 82% of the metros compared, beating out inflation over the same period—which stands at 63.5%. The rate increases of other metros also fell well below inflation, with Joburg recording a 48% increase and eThekwini increasing by 32.1%.

Contrary to perceptions, Cape Town’s property rates increased by only 6% over the past 10 years. This is mostly due to a drop in rates in 2016, which decreased by 7%, before a huge 22% cut in 2019.

The ‘below-inflation’ part of this evaluation can however be misleading.

Municipalities value your property through the General Valuation Roll (GVR), which is conducted every four years, and property rates are levied on the market value of a property. Therein lies the hidden rub as there has been outrage over the outcomes of these valuations across the country.

According to Mark Govender from Swindon Property Valuers, while the increases vary per province, they have seen rates increase on average by ±20%. The Organisation Undoing Tax Abuse (Outa) noted in Joburg that the average property value in some areas increased by 44%.

When this increase in the value of your property is combined with the municipal rate, many homeowners could then very well be paying rates well above inflation.

Adding exorbitant increases in other tariffs like electricity, water, sanitation, and refuse removal, the seemingly ‘reasonable’ tariff increases become another nail in the coffin.

Although electricity price hikes are mostly in line with Eskom’s 12.72% increase approved by Nersa, Cape Town has managed to shield its residents slightly with its 7.5% proposed increase.

The 7.5% increase will support the continuation of rates-funded services, infrastructure investment, and the installation of generators to minimize the impact of power outages, maintenance of informal settlements, provide rebates to vulnerable populations, enhance safety and security measures, and fund ongoing repairs and maintenance

Frankly, the only people smiling at the moment are landlords who can charge higher than normal rates for their properties due to nobody being able to afford to buy a house with interest rates so high. However, if you live in your house, you’re stuffed.

Is it just me, or does it seem like whoever pulls the strings is intent on keeping everyone just short of being able to afford anything nice? Whenever a sliver of light shines into our collective financial coffins, the lid is shifted and another nail gets hammered in.

[source:businesstech]