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Wednesday Mar 07, 2012

Delay in Cape clearing rates certificates costing property owners

Property transactions worth millions have been delayed as the City of Cape Town battles to iron out problems its new electronic database is having in issuing rates clearance certificates.

The city said the period to issue certificates has increased from about five days to 35 days since the launch of its Integrated Spatial Information System in November.

One of the processes the system deals with is the issuing of rates clearance certificates, which must be issued before a property sale can be finalised.

The delays affect home buyers, sellers, estate agents and conveyancing attorneys.

Earlier this year, the city admitted there were "teething problems" with the new system.

In January, it said there were "unforeseen data and technical problems" when it switched over to the new system.

During a finance portfolio committee meeting yesterday, Trevor Blake, the director of revenue in the city's finance directorate, explained that the delays in the beginning were caused by the city's system and that of the attorneys "not speaking to each other".

Last week city officials met the Cape Town Law Society to discuss the issue.

Blake said the city agreed to bring the time down to 20 days.

If a transaction took longer than that, law firms could log the case on an "escalated website" where officials would investigate the delays.

"We are not where we want to be, but what really caught us was the number of applications," Blake told the committee.

But, he said, it was hoped the system would be "back to normal" by later this month.

Samuel Seeff, the chairman of Seeff, said the delays were having a "massive impact" on property transactions.

He said the value of delayed transactions amounted to "millions". And, not only estate agents were being affected. "Sellers now have to wait longer for their money and there is additional bond interest as well as lost potential earnings or interest on profit on the sale of their asset. Buyers too will be faced with unplanned occupational rents."

Mark Brickles, of Remax, said it was costing the company "thousands of rands".

"This has seriously hampered our cash flow as well as the agents' cash flow. They are unable to meet their monthly debt obligations. We have had to apply for bridging finance on our pending transactions at an interest rate of over 30 percent."

Ian Neilson, the mayoral committee member for finance, said just over 355 000 transactions had been processed since the launch of the new system.

At yesterday's meeting, Blake said there were 1 351 "outstanding" cases.

Neilson told the Cape Argus in these cases, the applications were "awaiting payment schedule".

This means the seller must pay a deposit to cover all current municipal charges.

He said the city was receiving an average of 299 new applications each day.

"Although transactional volumes are high, the processing of rates clearance applications is being prioritised by our revenue department."

Cape Argus


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