There’s an increase in the number of properties in Tshwane and Johannesburg whose municipal debts exceed their values. This means household municipal debt is higher than the actual value of their homes. While the challenge of the non-payment of rates is not new, both metros say the COVID-19 pandemic had exacerbated the problem.
The City of Tshwane says the problem of properties owing more than their worth is prevalent. It says the challenge is mainly in old townships like Soshanguve, Atteridgeville, Eersterus and Mamelodi, affecting both residential and business properties.
The problem they say arises from the general non-payment of services received or properties not zoned correctly, as well as billing problems. But, the city encourages residents to pay for services as non-payment gives rise to other challenges.
“It’s a real problem in a country where unemployment is sitting and really there are all these challenges exacerbated by COVID over the past 2 years, I think that a lot needs to be done. There needs to be a lot more intervention obviously as a city as well, we are going through the financial situation that we are going through with very limited resources where we don’t really have enough people to go in to these places to fix these things. It really is being caught between a rock and a hard place but equally the residents find themselves between us and a very hard place as well,” says City of Tshwane’s Abel Tau.
The City of Joburg says most of these properties are businesses that have gone under and have no way of keeping up with rates payments. It says there are 960 000 properties that pay rates to the city, 56 owe more than their value. These have been handed over to lawyers to try and recoup the money owed to the city.
“Largely it’s properties which are basically business properties and these are businesses that are in financial trouble, businesses which are facing liquidation, basically being closed off, so it’s properties that are unable to service their debt. As you know if you are faced with issues of liquidation you are basically in no position to service your debt and hence the city has been unable to recover the amount owed, however if they still occupy the properties, they might still be consuming services like water and electricity which may have been terminated. That also brings in another complication but there is also the rates portion which is paid by each property which will keep accumulating,” says City of Joburg’s Nyaniso Jeku.
Property practitioner Leslie Sithathu says properties are probably the biggest investment that many people would make in their lifetime.
He says with the tough economic conditions, people must arm themselves with information to avoid their properties being attached and sold off.
“I would encourage people to go and make arrangements with the city instead of sitting and not speaking up, because legally then the city will have the right and can legally attach those properties and that opens a way for corruption because if somebody knows I am home and I am not approaching the city and I am quite, it’s an opportunity for them to tell their friends to say there is a property and whatever,” says Sithathu.
Sithatu says if a property owner comes forward when they experience financial difficulties, the courts will likely rule in their favour and give them time to find a solution.
