separate rates accounts: lessons from cape town 
20 January 2008

Individual rating of sectional title units has been rolled out in Cape Town, but many owners have been left confused. There are lessons to be learnt for the rest of the country as other local governments follow suit from next year.

Local governments are required to levy rates on individual sectional title units in their jurisdictions following the promulgation of the Local Government: Municipal Property Rates Act, 2004. In the past, the bodies corporate of sectional title schemes received rates accounts calculated on the value of the land on which the scheme was built. But now each owner of a sectional title unit will receive his or her individual rates account, calculated on the market value of the sectional title unit.

From the point of view of separate title property owners, nothing has really changed because these owners have always paid rates directly to their local municipality, and for some time these rates have been based on market values as determined by the local authority. The system of individual rating of sectional title units was introduced in the Cape Town metropole from July 1 this year, but will be applied in Johannesburg, Durban and in most of the rest of the country only from July 1 next year.

The hiccups and teething problems being experienced in Cape Town provide useful lessons for sectional title owners, trustees and managing agents in other areas.

The process of valuing all sectional title properties was undertaken by the City of Cape Town during the first part of 2007, and rates for sectional title units have since been calculated on these valuations. Valuations of sectional title units in most of the rest of the country will take place between now and June 30, 2008 for implementation from July 1, 2008.

From July 1 this year, owners of units in Cape Town expected to receive amended levy statements, showing decreased levies. And rightly so, because the municipal rates component of the levies is no longer paid by each body corporate but by the individual owners and directly to the City of Cape Town.

Click here to read full article written by J van der Walt

Judith van der Walt is an attorney at Paddocks

www.persfin.co.za