Joburg approves R446m in property rates relief for struggling customers

The City of Joburg (CoJ) has approved a raft of rates relief measures totalling nearly half a billion rand, for residential and multi-purpose residential properties as well as business properties impacted by the lockdown from March 26.

The rebates will be implemented from August but will be retrospective and will be based on the 2019/2020 tariffs that were in place for the three-month period during which lockdown measures were at their most severe.

This comes as the city admits that collection levels have “shown a steep decline” due to measures put in place to slow the spread of Covid-19.

It is important to note that this relief equates to approximately 3% of the R13.1-billion in property rates the city expects to receive this year.

The CoJ says all residential properties (as at the time of the declaration of the state of disaster) will receive relief. To effect the rebate, the threshold for rates will be temporarily increased from R350,000 to R600,000 for the three-month relief period.

Rebates will be loaded automatically during the August billing cycle and residential customers need not actively apply for relief.

Alongside the current rebate for the “first R350,000 of market value” line item, ratepayers will see an additional credit for “Prop.

Rates-Residential” (see example below).

Source: City of Joburg

This credit of R484.32 is a once-off rebate, comprising the difference between the R350,000 and R600,000 thresholds for all three months (on old 2019/2020 tariffs, which ran to June 30).

In other words, had the relief been in place for the period, ratepayers would’ve received an additional monthly rebate of R161 with the higher threshold.

Unlike other metros and municipalities which have implemented specific relief for indigent households, pensioners or those in arrears, the CoJ has approved a blanket rebate.

The city says relief will be provided to approximately 806,959 properties.

Relief for businesses

For businesses, the relief will not be automatic. Commercial property owners will need to apply to the city for a rebate, which will be effected by dropping the business ratio from 2.6 of the base rate to 2.3 for the three-month period (again, using the old rates).

Business property owners will need to complete forms which will be available on the city’s website and at walk-in centres (these are understood to be available this week still).

They will also need to “provide financials before Covid-19 and during Covid-19 [lockdown]”. It is not yet clear how exhaustive these ought to be.

Only those businesses with up-to-date municipal accounts (or with a confirmation of a payment arrangement) will be eligible for this relief.

Businesses that were operational during lockdown, such as essential services, as well as government properties also do not qualify for these rebates.

The city says approximately 48,425 business property owners could receive relief.

Multi-purpose residential properties

For multi-purpose residential properties (those with multiple dwellings that are not sectionalised), rebates will be provided to all buildings valued at R20-million or below.

Owners need to apply for this relief, which will see them exempt from paying rates for the three-month period.

The city says this will provide relief to approximately 884 property owners of the total 1,005 multi-purpose residential properties in the city.

The CoJ says the total revenue foregone for residential properties is estimated at R236-million for the three months, while the revenue foregone from business properties is approximately R200-million.

It is likely the city’s estimate is lower than a straightforward total of the credit multiplied by the 800,000 properties, due to the fact that many properties could fall substantially under the R600,000 threshold.

Foregone revenue from multi-purpose residential properties will be about R10-million. For those property owners who need to apply, rebates will be open from August 1 until November 30.

This article first appeared on Moneyweb and was republished with permission.

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