LEGISLATION
MPRA
PAGE 37
MUNICIPAL
PROPERTY
RATES ACT
Unlawful Discrimination
in the Imposing of Rates
and Taxes for Members
of residential Estates
An owner of immovable property in an
There is a strong argument that
estate is obliged to become a member
this constitutes double taxation of
of the homeowners’ association (HOA)
members in estates. Having already
as the governing body. Members
paid for the services they use as
The Local Government: Municipal
are obliged to pay levies to the
provided for by the estates, they
HOA for services provided to them
also have to pay the local council
by the HOA. These services are
for the same services, which it does
similar to those that a local council
not actually provide.
Property Rates Act empowers a local
council to levy rates on immovable
property within its jurisdiction. This
is done by identifying the categories
of property that a particular local
council wishes to levy, and then
selecting which properties should be
allowed exemption from rates and
taxes and, most importantly, which
qualify for rebates. In terms of the
Act, this power needs to be exercised
on a fair and equitable basis.
The determination of the rates policy
of a local council is an annual
occurrence and must be approved at
a council meeting, subject to a public
participation procedure.
Rates and taxes are imposed in order
to enable a local council to cover its
running costs and achieve its objects.
All owners of immovable properties
are obliged to pay rates and taxes.
This discussion focuses on the
rates and taxes paid by members of
residential estates to a local council
where the governing bodies of these
entities raise, finance and maintain
most of the township services. The
question is whether the legislation
constitutes a fair and equitable legal
scenario for owners of immovable
property in these estates.
provides to immovable properties
within its jurisdiction, such as security,
The formulation and imposition of
electricity, water and sewerage,
a rates policy is a discretionary
including reticulation.
exercise by a local council, and
courts of law are not readily inclined
Nationally, in most instances, a
to interfere with decisions of a
comparison between residential
local council. Active and collective
immovable properties in an estate and
involvement by HOA members in
those in the town area of the local
the public participation process that
council indicates that the same rates
establishes the rates policy may,
and taxes are payable and therefore
however, persuade a court of law
the same rebates allowed.
to intervene.
A local council simply applies the
To conclude, local council is legally
category of “residential property”,
obliged to levy different rates for
having taken care to do away with the
different categories of property, and
previous category of “privately owned
this must be done fairly and equitably,
township” to avoid an argument
taking into account the socio-economic
regarding additional rebates for
conditions within its jurisdiction and
immovable property within an estate.
the legislative framework. Estates are
advised to be proactive and, where
As estates already provide for their own
possible, collectively tackle the public
services to their members via levies
participation process in terms of the
raised, there is apparent discrimination,
rates policy procedure, in order to
because the imposition of rates and
pave the way for a more equitable
taxes on a flat basis of “residential
and fair contribution.
properties” by local councils results in
an unfair and inequitable legal situation
AJ van Rensburg
for members of an HOA, especially
VRB Attorneys
where local councils do not provide
these services to property owners in
the estates at all.