‘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
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.