If your rent goes up next year, a draft law that has landlords fuming could be to blame. There’s still confusion about who exactly will be affected by the proposals, but landlords in Grahamstown fear the worst and are already planning serious new rental hikes.
If your rent goes up next year, a draft law that has landlords fuming could be to blame. There’s still confusion about who exactly will be affected by the proposals, but landlords in Grahamstown fear the worst and are already planning serious new rental hikes.
This is in response to a clause in the new Municipal Rates Amendment Bill that seeks to firm up the distinction between residential and commercial property.
If passed in its present form, the bill leaves the door open for municipalities to charge commercial property rates on any residential property being used to generate income. In its assessment of the proposed amendment, watchdog group, Rates Watch, declared that “this will have a major impact on the rates levied on blocks of flats, individual houses, townhouses”.
Tenants will likely feel the effects next year, with agents already planning to charge higher rates as a direct result of the move.
The Greens, a digs complex near the university, confirmed that starting next year, rent would be going up by R400 a unit, to accommodate the increased rates expected once the new law is passed. Another agent, Sotheby’s, said that rent would increase by as much as R150 a room in the coming year, for the same reason.
When the Department of Cooperative Governance and Traditional Affairs released the Municipal Property Rates Amendment Bill last month, it touched off a firestorm of controversy. Of particular interest was a section that states: “residential property means property of which the primary use or permitted use is for residential purposes, excluding such property used to accommodate persons other than the owner for gain”.
The initial concern was this could also target any property owners who had invested in a second property, such as a holiday home. Responding to the outcry, the deputy Minister of Cooperative Governance and Traditional Affairs, Yunis Carrim, tried to reassure the public.
“People who own more than one residential property will not have to pay commercial rates,” Carrim said in an official statement issued by the department last week. “The intention is to ensure that guest houses, bed and breakfasts, small hotels, and the like pay commercial rates.”
However, it’s the phrase “and the like” that has left many people still unclear as to exactly what is intended. For example, there is little in the wording of the bill to suggest what will happen to homeowners who rent out a spare room. It is also unclear what impact the proposed amendment will have on local B&Bs.
Those which are currently operating as commercial properties should not see a change, but those valued as residential will feel the pinch if they are included in the scope of the bill, and are likely to charge more as a result. Comment on the bill closed on 22 July, but clarity may be on its way.
Acknowledging the continuing confusion, Carrim said the bill may be amended to better define its intent, before being introduced to Parliament. Whatever changes are made, however, it seems renters would be wise to start budgeting a little extra for next year.
