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Monday Aug 27, 2012

Municipal rates hurt Durban property owners

Unprecedented rate hikes in Durban have seen some commercial property rates bills double, while some residential property owners are paying 500 percent more a year compared with what they were paying six years ago.

Tony Langford outside his Mount Edgecombe home, which is costing him 500% more in rates.

The eThekwini municipality is squeezing ratepayers to fill its coffers - its valuation base has grown from R393.7 billion to R421.6bn, an increase of 7 percent - after its most recent valuations.

Durban businessman Prakash Naidu says the cost of doing business in the city was too expensive for the average business owner and companies were closing down.

Naidu owns factories in New Germany and his rates have increased by 300 percent since the last general valuation in 2008. He has submitted 11 objections - because his property is divided into 11 sections - and he is waiting for the outcome.

"The municipality also backdated my rates for about a year. They notified me about a year and a half ago that they had undervalued my property and, after the new general valuation, my rates' bill now stands at R43 000 a month," he said.

The high rates meant he had lost tenants and people had lost their jobs. "Considering that I am able to increase tenants' rentals by no more than 3 percent to 4 percent a year, my property, which was generating a modest profit, is now running at a loss," he said.

A Durban commercial property agent, who did not want to be named, said the rates were unacceptable. "I'm trying to sell a small retail shopping centre which we have valued at R3.2 million and the municipality has valued it at R7.7m," he said. Six years ago Anthony Langford's rates in Mount Edgecombe Estate Two were R11 000. In 2012 his property was valued at R8 million and his rates increased by about 500 percent to R72 000 a year.

He believed his property was worth a little over R5.2m. Langford, 62, is one of 10 734 property owners who objected to the March valuation and has had to pay the inflated rates because the municipality had not yet dealt with his grievance.

Keith Matthias, eThekwini's head of real estate, said the municipality did accept late objections where reasons were provided.

The Mercury

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