An already struggling and limping property market will be severely damaged should the Property Rates Amendment Bill become law without any further changes and it would sound the death knell for developers and investors, says Keith Wakefield, the of CEO Wakefields Real Estate.
This Bill which will see rates on rental properties more than double will stop residential development in its tracks particularly as the first to take up new build units, in some cases by as much as 50%, are investors. Developers and investors are of paramount importance to the property market. Without them there will be no properties to rent and those people who cannot afford to buy a home will face higher rentals.
Developers have felt the brunt of excessive rates on properties for years. Instead of encouraging developers by providing incentives to create more housing at all levels, government is driving developers away with legislation like this, said Wakefield.
A property market that is stagnant will ultimately mean a loss of income to the national treasury in the form of transfer duties, capital gains tax, and taxes on rental income.
Investing in rental property is one of the easier ways of creating wealth in the longer term. This legislation will shut the door on this and on many ordinary citizens trying to ensure they are able to live decently on retirement.
However, a holiday home that stands empty until used by the owner or a property that is used by in-laws or family and on which no rental is paid is not affected by this legislation.
It is inevitable that rentals will rise to as much as the market will absorb to cover this additional cost. At the lower end of the rental market those tenants who cannot afford to pay up will find themselves resorting to shacks. Alternatively it could exacerbate overcrowding as more than one family shares a small space and the rental.
Many people who bought property when the market was at its peak and were unable to sell because of market conditions were forced to let their properties to meet their bond and rates commitments or go insolvent. These people are now going to be penalised even further by being charged double rates.
When it comes to suggesting that the rates period should be extended to seven years from five this is totally unfair. If municipalities want to ride the wave of property booms and rake in additional income they should also take the fall when the market changes.
It seems that the law makers have not thought through the process nor do they understand the economics of the property market, said Wakefield.
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I was absolutely shocked to hear about this proposed bill and most of all the time frame in which to respond. Published on the 9th June 2011 (in the Government Gazette nog al)
I am also not aware that anything was written in the News papers which are at the best of times a waste of time anyway not to mention having to on top of all this play policeman by wading through the Government Gazette as and when these are published, and then to cap it all a deadline for objections 22nd July 2011
I want to thank the NMB Ratepayers Association for being our watchdog in this and the many other things they have sniffed out.
I agree that we should take action, go on strike, do anything to stop paying Rates into a sinking Fund.
100% put the amounts in a Trust until we get answers.
I am already at the recieving end of the Rates Saga which has effectively turned an Investment decision taken in 2000 into an absolute nightmare due to in my opinion the Total inability of the Municipality to make decisions and deliver services.
Having been involved in a near fatal accident in 1998 which left me incapable of making a living for the next 2 years and subsequentlyI was faced with some serious decision making.
I would think my story could be used to good avail by the Association to prove the point Kevin Wakeford is making about killing all property developement in South Africa.
I am in an unresolved battle which started way back in 2003 when I applied for rezoning of my wifes property from “Undetermined” to “Residential 2 Multiple dwellings the rest is History but I have dug my heels in about many matters that insued since then.
I feel that possibly the NMB Rate Payers Association could assist in resolving these issues at the same time using it as a prime example of KILLING the GOOSE that lays the GOLDEN EGG.
I am right behind you.
Its the old saying of the only thing necessary for evil to prevail is that good men do nothing.
Lets all put shoulder to the wheel and get things done to restore our crumbling City
My rates have already doubled because I have more than one Granny Flat as they call it.
I turned my home into rentable units and once the plans had been passed my rates doubled as the property is now regarded as a business
The snag is the whole property was approved for 8 dwelling units but now I find I cannot develop it to its full rezoned potential as a result of the lack of facilities by the NMBM to service the waste water that would be generated.
This has effectively cut my potential income in half.
HALF A BUSINESS at FULL BUSINESS RATES.
Like being promised a motor car, paying the full price and then finding it does not have an Engine.
This type of nonsense could only be allowed to happen in Institutions that have absolutely no idea of how business works.
Pete Keulemans
1 River Road Redhouse