‘Shock’ bill met with anger

Whether or not it was pure ig­no­rance, a slip of the pen or a gen­uine over­sight, the badly-worded amend­ments to the Prop­erty Rates Act have got an aw­ful lot of peo­ple hot un­der the col­lar. Lea Jacobs finds out why

Business Day - Home Front - - HOMEFRONT -

THE gov­ern­ment has once again put its foot in it by an­nounc­ing that all sec­ond prop­er­ties would be li­able for com­mer­cial rates when in ac­tual fact the amend­ments are only in­tended to ap­ply to own­ers of guest houses and bed-and­break­fast es­tab­lish­ments.

The out­cry that fol­lowed the an­nounce­ment was loud and clear; South African home­own­ers are no longer will­ing to take the gov­ern­ment’s word for it that the amend­ments were not aimed at those who own and rent out sec­ond prop­er­ties and a large ma­jor­ity have ob­jected to the pro­posed amend­ments.

Real es­tate groups have also re­acted, with many pub­licly stat­ing their ob­jec­tions to some­thing that could eas­ily de­rail the al­ready-frag­ile prop­erty mar­ket.

In a re­cent re­port Barry Davies, the Fran­chis­ing Di­rec­tor of the Chas Everitt In­ter­na­tional Prop­erty Group said, “If the leg­is­la­tor’s in­ten­tion was that the amend­ments should only ap­ply to prop­er­ties used for com­mer­cial pur­poses, why did they draft and pro­pose amend­ments with, never mind loop­holes, but sink­holes which you could fly a jumbo through. If this is the case, the Bill is in­ac­cu­rately and thought­lessly worded in the cur­rent eco­nomic en­vi­ron­ment.”

Adrian Goslett, CEO

of RE/MAX of South­ern Africa, also re­cently sub­mit­ted an ob­jec­tion to the gov­ern­ment. In the two-page doc­u­ment Goslett, who was acting on be­half of 150 RE/MAX fran­chise of­fices that em­ployed 1 700 es­tate agents, said that the amend­ments would have dire con­se­quences for all par­ties and the econ­omy as a whole. The ef­fects on ten­ants, how­ever, would be most se­ri­ous.

“In prac­tice, most if not all of the in­creased cost will be passed onto the ten­ant. These are peo­ple, many of whom were forced into this sit­u­a­tion due to the cur­rent poor econ­omy, who made the de­ci­sion not to carry ma­jor debt re­pay­ments each month in an at­tempt to make ends meet.”

The fright­en­ing part of the whole equa­tion is that once again the gov­ern­ment is chang­ing the law in its favour, with lit­tle or no re­gard to the con­se­quences. While they may say that it was not their in­ten­tion to pe­nalise sec­ond home­own­ers by loosely word­ing the amend­ment, you can pretty much bet that some cash strapped mu­nic­i­pal­ity is go­ing to en­force the law if the Bill goes through un­chal­lenged. Af­ter all, that is what the bill, as it stands, cur­rently says.

Berry Everitt, MD for the Chas Everitt In­ter­na­tional prop­erty group, agrees that the pro­posed changes to the Bill, if en­acted as they stand, could cause the al­ready del­i­cate re­la­tion­ship be­tween ratepay­ers and many lo­cal authorities to break down fur­ther.

He notes that while much at­ten­tion is be­ing paid to the pro­vi­sion in the Bill that might see non-pri­mary res­i­dences taxed at the same rate as com­mer­cial build­ings, some other se­ri­ous flaws in the pro­posed leg­is­la­tion should not be ig­nored.

“The worst of these,” he says, “is the sug­gested amend­ment to the Prop­erty Rates Act that seeks to de-link the right of lo­cal authorities to col­lect rev­enue in the form of prop­erty taxes from the re­spon­si­bil­ity of those lo­cal authorities to de­liver ser­vices in re­turn for those taxes”.

“In short, what it would mean is that mu­nic­i­pal­i­ties could use the rates they col­lect from prop­erty own­ers in one area to fund ser­vices in an­other area – or ac­tu­ally to fund any­thing they liked, in­clud­ing the lav­ish par­ties and ex­or­bi­tant salaries for which some coun­cils have al­ready be­come in­fa­mous.”

It has be­come abun­dantly clear that South Africans can no longer sit back and al­low the gov­ern­ment to change the law when that law will di­rectly af­fect the peo­ple pay­ing their bills.

A Dur­ban-based at­tor­ney has re­ported that his of­fice alone re­ceived about 2 000 emails from dis­grun­tled home­own­ers, both here and abroad.

Even those who only owned one prop­erty have come out fight­ing, de­ter­mined to stop the gov­ern­ment in its tracks be­fore it causes any more dam­age to an al­ready shaky area of the econ­omy.

Adrian Walden, a se­nior part­ner with the law firm Morris Fuller Walden Wil­liams, said what sur­prised him the most was the num­ber of an­gry peo­ple that phoned his of­fices de­mand­ing to know why a pub­lic an­nounce­ment had not been made re­gard­ing the changes that the Bill would cause. There was also a great deal of concern as to how the gov­ern­ment could go ahead with “some­thing like this”.

“I don't know whether the gov­ern­ment was sur­prised by the back­lash and there­fore is­sued the "qual­i­fi­ca­tion" that the Bill would be amended, but I per­son­ally think that the gov­ern­ment was sur­prised that it was "caught out" in try­ing to sneak through a hugely im­por­tant Bill, by sim­ply mak­ing an amend­ment to a def­i­ni­tion.”

It re­mains to be seen what the gov­ern­ment does next: how­ever, one thing has be­come in­creas­ingly clear, nei­ther those that own prop­erty nor the real es­tate agency’s that sell this valu­able com­mod­ity are go­ing to ac­cept these changes ly­ing down.

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