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BCM Rates, are you paying too much?

• Mike Francis | Director, Bax Kaplan Russell Inc

Are you happy with the rates that you are paying to Buffalo City Municipality on your property?
A recent article published on the front page of the Daily Dispatch stated that a legal dispute is looming between East London property owners and Buffalo City Municipality regarding the substantial increases in rates payable in respect of East London properties. This is as a direct result of recent increases in the valuations of properties.
Section 229 of the Constitution provides that a municipality may impose rates on a property if authorised by national legislation and the power of a municipality to impose rates on the property may be regulated by national legislation. The relevant national legislation is the Systems Act, the Finance Act and the Rates Act.

Bax Kaplan Russell Inc has advised a number of property owners on this rates issue and common questions that have been asked are the following:
If I have lodged an objection can I continue to make payment of rates at the old rate or must I pay the new rates?
If I did not receive notice of the new valuation and therefore could not lodge an objection, what can I do?
What is the process involved after objections have been lodged and how long does it take for the objection to be ruled upon?
Does the local community comprising property owners not have a right to participate in the decision-making process of the municipality regarding the setting of rates?
Do property owners have any legal right to challenge the Buffalo City Municipality rates policy?
Has Buffalo City Municipality followed the correct legal and procedural steps which are required in order to determine the rates policy?
Has Buffalo City Municipality complied with the Systems Act, the Finance Act and the Rates Act?

The answers to these questions will depend on the particular circumstances of the property owner. It is inadvisable and indeed reckless in an article of this nature to attempt to provide specific legal advice to property owners who are encouraged to seek legal advice in order to protect the value of their properties. If the rates increase is not challenged the result will be that East London will become a very unattractive area for property investors and the value of properties, particularly commercial properties will be negatively affected. A further unfortunate consequence is that landlords who lease properties normally have a condition incorporated in the lease which provides that if the rates have increased this increase can be passed on to the tenant. The tenant ends up paying the increase and has no legal basis upon which to lodge an objection as such an objection can only be lodged by the owner of the property.

Seek legal advice before it is too late.