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Thursday Feb 13, 2014

Sapoa raises concern over escalating property rates

The steep escalation in municipal costs in South Africa has led to the SA Property Owners Association (Sapoa) appointing specialist consultancy Rates Watch to research budgets for the coming year.

The mandate from Sapoa, the voice of the commercial and industrial property sector, is to focus on unearthing budget information from the 11 largest municipalities on key property-related costs, such as rates and taxes, electricity and water.

Rates Watch must also identify, analyse and collect data on relevant municipal policies and legislation and the medium-term revenue and expenditure frameworks at these large municipalities.

Sapoa warned last year that commercial property owners were poised to challenge the major urban municipalities over high increases in rates, which they said were unsustainable.

Estienne de Klerk, Sapoa's president, said last year that the association would question the legality of these increased rates and if it did not receive a satisfactory response, it would approach the local government minister, or even the finance minister.

'Challenging municipalities in court will be our last resort. We have always had a collaborative approach with government and try to resolve these things out of court.'
Sapoa chief executive Neil Gopal has adopted a softer approach, stating yesterday that its primary goal was to alert property owners and investor members to changes in property-related municipal costs that could affect them.

'As a sector, commercial and industrial property wants to contribute in a positive way towards the efficient functioning of municipalities.

'Sapoa members contribute significantly to the rates base and we believe it's in the interest of ourselves and municipalities across South Africa to partner on this matter,' Gopal said.

He did admit that rising municipal rates and taxes were 'a hot-button issue' and one that negatively affected not only operating costs and gross rentals but also made demands on property management resources.

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