The last week a proposed change to the Property Rates Amendment Bill made headlines in newspapers and websites all over the country. Hundreds of readers were frustrated and become very worried about their future investments in this country.

It stated that homeowners who own a second residential property (which might be rented out) would have to pay commercial municipal tax rates instead of the current residential tax rates. That would in effect have doubled the current municipal taxes in most cases, in many cases even higher.

Rental prices would skyrocket

It would have been a disaster, since rental prices would have had to increase since homeowners would find it hard to absorb the additional rates without making a loss. Higher rentals would also mean lower occupancy and could even cause some property owners to default on their bond account and lose their properties.

Unfair discrimination / double standards

It would also have been very unfair if owners were to pay commercial rates for properties zoned as residential and in areas where the municipalities actually evicted businesses operating from residential zones.

Fortunately the Department of Cooperative Governance responded to the news by releasing a new statement which clarified the situation.

RELIEF & CLARIFICATION :

Only if operating businesses

The rates that would increase is not applicable to second and third residential properties (even if being rented out), but rather to properties being operated as businesses such as guest houses, bed and breakfasts and small hotels. In these cases the properties should already be zoned for business and should pay the applicable commercial/business taxes which seems fair.

Monitoring these zoned properties would also be a lot easier than monitoring properties zoned as residential but taxed as commercial.