By Chantelle Gladwin-Wood (Partner) and Lindokuhle Mashilo (Candidate Attorney)
Introduction
This article will explain what kind of rebate is applicable to properties within the jurisdiction of the City of Johannesburg (“COJ”) municipal boundary, based on losses suffered as a result of COVID-19, as set out in the COJ’s 2020.2021 Rates Policy (a copy of which is available on https://www.joburg.org.za/services_/Documents/rates%20and%20taxes/Rates%20Policy%202020%2028%20July%202020.pdfx) (“The Rates Policy”).
What relief does this rebate give?
Hypothetically, in terms of the Rates Policy, the application forms and the Council minutes dated 30 June 2020 approving this rebate, a property owner can apply for and be granted relief of up to 100% of their monthly rates in respect of their property, for as long a period as the COJ is willing to grant that relief for.
However, when you drill down into the detail, it becomes clear that the rebate that the COJ is offering falls far short of this mark – in fact, it is so
little that it will hardly make any difference at all to those most desperately affected.
What kinds of properties is this available to?
The Rates Policy indicates that this rebate is available to all types of properties within the jurisdiction of the COJ. This comes as a surprise to some, because, although the COJ has already made two rebate forms available, namely one for business properties (available here https://www.jicp.org.za/wpcontent/uploads/2020/08/Business_Disaster_relief_Application_form.pdf) and one for multipurpose residential properties (available here https://www.jicp.org.za/wpcontent/uploads/2020/08/Multipurpose_residential_Disaster_relief_Application.pdf), there isn’t one for residential properties.
What do residential properties get as a rebate?
The reason that there is no form for residential properties is because, in terms of the minutes of meeting of the COJ’s Council on 30 June 2020, at which the rebate was approved, the exemption for residential properties will be automatically loaded by the COJ, without the need for application to be made, and will be granted by increasing the non-ratable portion of the property from R 350,000 to R 600,000 for the months of April, May and June 2020.
The rands and cents value of the rebate will vary from one property owner to the next, as it is calculated on the property value (which is variable). The higher the value of the property, the less the impact of the rebate.
Bizarrely, the minutes of the Council meeting on 30 June 2020 indicate that the residential COVID rebate is not available to sectional title properties that it had not applied for the sectional title rebate as at 31 March 2020. Why this would be the case is not understood by the authors. If this is not a typo (which it might be), this ought to be challenged in court, because there is no logical reason to exclude sectional title properties of this nature.
What do commercial properties get as a rebate?
If they can provide documentation to show the COJ that they suffered as a result of COVID, they will qualify for a 3 month rebate which will be implemented by reducing the business rate ratio of 1: 2.5 (which ordinarily applies to business properties) to 1: 2.3. This represents a reduction of rates by 8% per month, for three months.
What do multipurpose residential properties get as a rebate?
Only properties valued at less than R 20m and which are up to date with their accounts (or had payment arrangements in place for arrears) before lockdown was declared are eligible. They will get a 100% rebate for three months. In subpara (vii) however the minutes of the Council meeting 30 June 2020 indicate that properties worth more than R 20m can apply, but that, if the rebate is granted in respect of such properties, it will be on a case by case basis and limited to a rebate on up to R 20m worth of value.
Timing issues
It is yet to be seen whether any relief will be granted for the months of July 2020 onwards, as the relief available only applies to the months of April – June 2020, which fell into the 2019.2020 financial year. No relief has been approved as of yet (as far as the authors hereof are aware) for any part of the 2021 financial year (which began on 1 July 2020). This brings into question whether the entire rebate system is valid at all – because it was approved in terms of the Rates Policy which came into effect on 1 July 2020 and relates to rates charged for the 2021 financial year, whilst the rebate is being applied to the 2020 financial year (which rebate was not approved in terms of the 2019.2020 year Rates Policy).
General comments
In our view, whilst the gesture is appreciated, the rebates are far too small to make any meaningful impact to any person affected by COVID. A person without an income or a company that has been forced to downsize or has lost most of its income is not going to derive much benefit out of these rebates.
Moreover, they are haphazardly designed. Multipurpose residential properties (i.e. large blocks of flats) get the largest rebate – up to 100% of rates on up to R 20m – yet the owners are not obliged by law to pass this rebate onto
their tenants and the usage of this type of property may be a mix of business and residential. Residential property owners – who stand to lose their homes – get the tiniest fraction of a rebate – less so than business properties (who at least get a fixed 8% across the board).
The exclusions too make little sense. It is not understood what purpose is served in excluding sectional title properties which did not apply for the sectional title rebate, or by excluding properties over R 20m in the introductory paragraph relating to multipurpose properties but then by including them again at the end (even if on a ‘case by case’ basis – are not all applications considered in a case by case basis?).
Moreover, to provide relief across the board to all owners of a certain category might appear to be the fairest way to provide a rebate, but in reality this makes no sense as many of these persons have not suffered from COVID or have suffered to a different degree. The rebates ought to be reserved for those who really need them and are the most desperately affected,
