The Rates Panic Is Over For Now

Johannesburg - Government used too broad a brush to describe its proposed amendment to the Municipal Property Rates Act, thus painting itself into a corner.

This was the view of experts as government tried to douse the flames amid an uproar in property circles countrywide about the proposed changes.

The experts further said that government would have to alter the proposed legislation because, in its current form, it includes all rental property.

On Monday Yunus Carrim, Deputy Minister of Cooperative Government and Traditional Affairs, tried to defuse the situation, saying people who own more than one residential property will not be taxed at commercial rates on their additional residences.

The aim of the amendment, he said, was to ensure that guesthouses, bed-and-breakfasts, small hotels and the like paid the commercial tariff.

Ben Espach, an expert in municipal property rates, said that was not what the proposed amendment said and, if that is government’s intention, that’s what it must stipulate.

The definition in the draft amendment reads that a property used to house people who are not the owner for financial benefit will no longer be classed as residential, and will therefore no longer be assessed at the residential rate but rather at the commercial rate.

Espach said if the intention is to target guesthouses, bed-and-breakfast establishments and small hotels for the business tariff, the definition needs to be altered to specify this. At the moment the definition includes all residential property being let.

On Tuesday Carrim said the amendment would be changed to offer greater clarity, if necessary, before the proposed bill was submitted to parliament.

Kokkie Herman, a director at Rates Watch, which specialises in property rates for individual property owners, said the problem was that the legislator wanted to target specific types of property but in the process had included everyone in the net.

He said government would have to change the definition to achieve its aim, after which there should no longer be a problem with its interpretation.

Schalk van der Merwe, a property attorney at VFV Mseleku, said what had been proposed was yet another example of thoughtless alteration to legislation – the consequences of which government said had never been the intention.

He said there were many other examples – such as the new Consumer Protection Act and its impact on the rental market, which is still unresolved. This creates great uncertainty in a property market already under severe pressure.

On Tuesday the DA asked the deputy minister to spell out precisely which properties would be assessed at business tariffs.

The big question remains as to how holiday homes, which are let from time to time, will be affected by the amendment, as well as the status of blocks of flats and townhouse developments owned by individual investors.

Johannesburg's inner city appears to be making steady progress in luring upmarket residential buyers into the fold.

CBD is luring more up-market buyers

Apartment prices touch new highs

Johannesburg’s inner city appears to be making steady progress in luring upmarket residential buyers into the fold.

Last month, an apartment of 147m² in the historic headquarters of Barclays Bank at 87 Commissioner Street fetched R1,15m. That’s believed to be the highest price ever paid for an inner-city office-to-flat conversion, bar the 226m² shell in nearby Corner House bought in June 2005 for R1,25m by executive Wendy Luhabe, wife of former Gauteng premier Mbhazima Shilowa.

Corner House was the flagship renovation of developer Urban Ocean, founded by Alfonso Botha and Duan Coetzee in 2004. The duo entered the CBD with much fanfare, buying up old office buildings with ambitious plans to turn the inner city into a trendy work, live and play hub. But by early 2008, some of Urban Ocean’s regeneration efforts had stalled, and demand for higher income housing dried up.

Now the trend appears to be reversing. Jawitz Properties agent Rochelle Johnson, who clinched the R1,15m Commissioner Street sale, says investor interest in the luxury end of the CBD market has re-emerged in recent months. The impending opening of the Gautrain station, which will link the CBD to Rosebank and Sandton, as well as the advent of art galleries, restaurants and shops in the area, are attracting more young executives, academics and creative’s into the city.

Besides, CBD loft-style developments are far more affordable than their counterparts in Johannesburg’s leafy northern suburbs. Johnson says CBD selling prices average R8000R10000/m² That compares favourably with the average R38000/m² that buyers are paying for the latest residential phase at mixed-use precinct Melrose Arch near Rosebank, for instance.

Figures from property research portal Lightstone show that the highest price paid in the Johannesburg CBD last year was R800000 for an 89m² unit in an apartment block, The Newtown in Quinn Street, Newtown.

Property group Broll confirms that Jo’burg’s inner city is back on the radars of both residential and commercial investors. Broll broker Keke Khojane says a “huge transformation” is under way in the inner city, including Braamfontein and Newtown, fuelled by a number of new and brownfield developments. Easy access to highways, rail and bus transport is a key selling point.

Source: Financial Mail

 

Billing Mess Could Cost Joburg

The City of Johannesburg faces hefty penalties imposed by the National Consumer Commission (NCC) over the recent large-scale billing crisis that the city claims has been resolved.

This follows a year-and-a-half of residents complaining about incorrect statements.

The city claims to have sorted out about 52 000 complaints that arose after it moved its disparate systems onto SAP, under project Phakama, which cost R580 million to implement between November 2009 and the middle of last year.

However, despite the city's claims of progress, the NCC says there are almost 200 unresolved issues. This week, it will come down on the city over the backlog, issuing it with notices forcing it to fix the problems.

If the city fails to resolve the problems the NCC has been battling to get it to sort out, it faces a maximum penalty of R1 million for each complaint.

The city's billing system has been a major headache for Johannesburg consumers, who have been complaining about grossly inflated bills, inaccurate meter readings, illegal disconnections and a lack of service from the city's call centre since the project started.

About 65 000 out of the more than 1.2 million account-holders were affected by the crisis as the city battled with post-implementation issues.

Towards the end of last month, Johannesburg claimed it had sorted out the inherent issues, while 13 000 outstanding complaints would be fixed within a month or two.

Or else

However, despite the city's assurances, the NCC has had enough, claiming it has faced an uphill task trying to get complaints sorted out. The commission received between 300 and 400 grievances from disgruntled residents, of which about half have been resolved.

Under the Consumer Protection Act (CPA), which came into effect in April, the NCC has the power to handle complaints, force companies to sort out issues and refer unresolved matters to the tribunal for adjudication.

This week, the commission will put the city on notice to wrap up the unresolved complaints. If Johannesburg does not resolve the problems within 21 days, it faces a maximum fine R1 million.

However, this fine could be imposed for each unresolved case that the NCC is fighting, taking the possible penalty to as much as R200 million.

Commissioner Mamodupi Mohlala says the NCC is preparing compliance notices to force the city to resolve outstanding issues. She says two notices will be served: one to cover general unresolved issues and one seeking the maximum fine over a case in which a consumer lost out on rental income.

On Wednesday, the NCC will quantify the penalties it will seek for the bulk of the unresolved complaints. However, in the matter of the resident who lost rental income, the NCC wants the city to pay the maximum R1 million fine, says Mohlala.

The Johannesburg resident was involved in a dispute with the city over incorrect meter readings, which led to wrong bills, says Mohlala. Despite the ongoing battle, Johannesburg removed the consumer's electricity meter, a “heavy-handed” act that led to lost income as the property cannot be leased, she says.

As a result, the NCC will seek the maximum penalty, because Johannesburg has not fully cooperated with the NCC, and its actions caused financial harm to the consumer. The complainant was treated in an “unbecoming” manner, and the city has yet to explain why it ripped the meter out, she argues.

The city will be given between 15 and 21 days to resolve all the outstanding problems. If it fails to do so, the matter will be sent to the tribunal for an administrative fine to be imposed, says Mohlala. Consumers are being prejudiced, and the commission has done all it can to get the city to respond, she argues.

Mohlala explains, in some instances, resolution is dragging on and the city has argued that the change in management is behind the delays. This is not acceptable, as the systems have not changed, she argues.

After the recent municipal elections, Parks Tau replaced Amos Masondo as mayor, and Trevor Fowler will take over as city manager from 1 October, replacing Mavela Dlamini.

Many issues

Complaints lodged with the NCC vary from incorrect meter readings to wrong bills and the city's inability to reconcile statements, Mohlala says. “We just don't understand what is happening to hold the city back on these issues.”

The City of Johannesburg was one of the first entities the NCC met with after it came into being, says Mohlala. “They can't keep on giving the same excuses to consumers.”

Mohlala wants concrete answers and resolution time frames. She gets the sense that the city is saying it is dealing with unresolved issues, but is not providing concrete answers as to what the problem is, and when the matters will be sorted out. “Consumers can't be held in abeyance and left in limbo forever.”

The NCC believes there are many more outstanding complaints than those lodged with it. Mohlala says the NCC can only act on complaints it has received.

The city did not immediately respond to a request for comment.

 

Property owners urged to oppose new bill

Johannesburg - Property owners and tenants are being called on to object to the draft municipal property rates bill despite assurances from government.

"There are just a few days left to lodge comments on the municipal property rates amendments bill - and both property investors and tenants should be objecting strenuously to at least one clause in the proposed legislation," said Hano Jacobs, chief executive of the Realty 1 International Property Group, on Tuesday.

Jacobs is worried that the proposed bill would result in people who own more than one residential property being forced to pay more expensive commercial rates on additional properties.

"What this will mean if the bill is passed, is that residential rental properties will in future be treated as commercial properties, and that the property rates levied on them will in most cases be more than three times what the owners are currently paying," he said.

However, the department of cooperative governance and traditional affairs said on Monday this was not the correct interpretation of the proposed amendment.

"But contrary to media reports on the draft bill, people who own more than one residential property will not have to pay commercial rates on their additional residential properties," said Deputy Minister Yunus Carrim in a statement.

"The intention is to ensure that guesthouses, bed-and-breakfast establishments, small hotels and the like pay commercial rates.

"If necessary, we will amend the draft to make this clearer before submitting the bill to parliament."

Carrim said the new legislation was supposed to make property rating "simpler, more transparent, more uniform and easier to implement".

The only policy shifts in the bill were that properties used for game hunting would be regarded as agricultural property and subject to rates; that there would be uniformity across municipalities in rating houses owned by recipients of old age pensions and disability grants; and that some public service infrastructure would be excluded from property rates because of their contribution to the country's developmental needs.

The bill was gazetted for comment on June 9 and the last day for public comment is Friday, July 22.

Comment can be faxed to 012-334-4811 or emailed to mpra@cogta.gov.za.

House Prices Show Signs of Growth

Johannesburg - House prices grew marginally in June compared to the same month last year, bond originator ooba said on Monday. "The June oobarometer price index reveals that the average house price rose 1% year-on-year (y/y) to R845 725 from R837 599 a year earlier," ooba CEO Saul Geffen said.

The increase followed two months of y/y decreases in local house prices. Growth in the average purchase price for first-time buyers increased slightly, with y/y growth of 1.1% to R618 084 in June 2011 from R611 611 a year earlier. The average approved bond size grew y/y to 6.1% at R737 457 from R694 759 a year earlier.

Geffen said the value of approved bonds for ooba reached a three-year high in June 2011. "We have experienced a growth of 51.9% in the value of approved home loans in the last quarter in comparison to same period in 2010," he said. "However, the volume of approved loans in June were still only 25% of the approved loans recorded at the peak of the market in May 2007."

Geffen attributed the improved property market conditions to the current low interest rate environment. "The record low interest rates, coupled with subdued property price inflation, increased bank approval rates and lower deposit requirements, has resulted in an influx of applications by potential homeowners."

Major lenders had also relaxed their lending criteria. "The effective approval rate has increased to 63.9% in June 2011, up from the lowest effective approval rate of 55.6% recorded in May 2010," he said.

This was still well below ooba's peak approval rate of 81% in May 2007, he said.

Tariff hikes hit Jo'burg hardest

Consumers and ratepayers across the country have been left reeling as municipalities have imposed double-digit hikes in rates and electricity tariffs.

The hardest-hit residents are those in major cities such as Johannesburg, Cape Town, Bloemfontein, Durban and Pretoria.

The shock increases come shortly after the local government elections, as new councils sit to vote on their budgets for the next financial year.

Apart from the rates and taxes hikes, most people will also feel the pinch as other services such as bus and taxi fares are also expected to be increased.

Already, commuters in Bloemfontein have embarked on a bus boycott in protest against the increase of bus fares by a local operator, Interstate bus company.

In Johannesburg, property rates have been increased by 6.7% for all categories of properties, 14% for water and another 6.7% for refuse removal.

But the real shocker in Johannesburg is the 27.7% increase for electricity. This ranges from 5% for prepaid customers to 31% and 28% for business and industrial customers respectively.

Johannesburg residents with a property valued at less than R150000 will pay an annual rate of R60. The Johannesburg increases are still lower compared to last year’s hike of between 15% and 33,5%.

In Durban, the electricity price increase is also above 20%, while customers in Cape Town will see electricity charges increase by 20% and water and sanitation rises by 8.28%.

Joburg's turnaround plan 'yielding results'

Johannesburg's turnaround strategy has been a catalyst for further improvements and increased confidence in the inner city, said Sipho Shabangu, leasing and sales broker for independent property services group JHI Properties, on Wednesday.

The city's turnaround strategy was adopted in early 2000. It led to significant infrastructure developments including new taxi ranks, the Rea Vaya bus rapid transit system and revamped residential accommodation.

"Various projects are either completed or underway in the CBD, Braamfontein, Newtown and the Empire Road area in Parktown," said Shabangu.

"A further symbolic sign that that the city is coming alive is the refurbishment of the Johannesburg City Hall, in order to accommodate music events and meetings," he said.

The installation of CCTV cameras, coupled with visible policing, had helped areas such as Braamfontein see an increase in demand for both office and residential accommodation, suggested Shabangu.

He said good news for the city was that planning was in progress for "an impressive new mixed-used development" to be known as Stimela Square, situated at the corner of Sauer and Hall Streets on the southern fringe of Johannesburg CBD.

"This landmark project creates a 'city' in one block, comprising offices, retail and a hotel in one consolidated development," he said.

The completion of the Gautrain station at Park Station in Braamfontein boded well for stimulation of a higher demand for office accommodation in the area, said Shabangu.

Shabangu noted that the expansion of Empire Road and the construction of a bus rapid transit station would serve to facilitate accessibility to the M1 for both private and public transport users, providing "another positive for the commercial property market in the area".

 

 

Parking firm coining it 'as Braamfontein dies'

THE new metered parking system is killing Braamfontein, say residents and businesses who complain bitterly about having to pay R7.50 an hour for parking.

Catherine Corry, who works for a property development company, says: “We’ve been in the Braamfontein district for the past eight years, and have slowly been trying to bring a positive change by improving buildings and creating new and exciting shops to attract new customers to the area and, ultimately, contributing to revitalising the city centre.”

However, the recent introduction of the Ace Parking system was undermining their efforts, Corry says.

The system, which operates along Juta Street and the lower end of De Beer Street, has cost them office tenants. A restaurant on the corner of Juta and De Beer streets, Corry says, is also under strain because patrons find the parking system too expensive and “ineffective in providing a parking solution”.

Other tenants are also experiencing a significant reduction in foot traffic, Corry says, adding that the area’s tenants and landlords were not involved in any decision-making process or adequately informed about this new system.

“There has been no participation from our side in the development of the area. The notion that a few months ago there was free, available parking, but now there is paid parking, with no security benefits and continued illegal parking, is ludicrous,” she says.

The parking attendants are also not trained adequately to communicate the process to drivers who park on the street as drivers are taking their printed parking ticket with them instead of leaving it on their vehicles’ dashboard, which often results in parking fines.

It is also not explained to motorists that there is a time limit on parking or that they need to pay beforehand.

Ace charges R7.50 for the first hour and R3.75 for every half-hour after that. That is more expensive than parking at Sandton City, which is R7 for the first hour and then R2 thereafter, or Rosebank Mall, which charges R6 for the first hour with increments of R1 after that.

These shopping centre parking areas are monitored by security and usually covered – the public street parking offers none of these aspects, Corry says.

The parking attendants also have a bad attitude:

“(They) lounge on the public artworks down Juta Street, sometimes without their shoes on.”

There is no alternative, so if a building doesn’t have its own parking area, monthly parking can cost up to R1 350, she says.

“This system is incredibly frustrating as we cannot offer our tenants, clients or patrons any advice or solution. Before the system came into place, our own security ensured there were no hawkers or illegal parking guards hassling anyone… This is not the case anymore.

The metro police defend the system. Director of licensing, prosecutions and courts Gerrie Gerneke says: “We’ve had very few negative comments. The biggest challenge was to find parking for employees used to parking for free. That… has now been resolved.”

Phase 2 of the project was west of Rissik Street, between Anderson and Jeppe streets, which was highly successful, he says.

 

Shock as electricity tariffs go up 27.7%

Hard-pressed South Africans will have to dig deeper into their pockets as a fresh wave of municipal services tariff hikes, set to further shrivel their salaries, take effect tomorrow.

Compared to residents of three other metros, City of Johannesburg ratepayers will be the hardest hit as their electricity rates will increase by 27.7% tomorrow.

In Cape Town, eThekwini and Nelson Mandela Bay, electricity tariffs have risen by 20%, 19.8%, and 22% for average-sized households.

Tariff increases for small, medium and large businesses range from 20% to 30% in the four metros.

Announcing the City of Joburg's R33-billion budget for 2011-2012 yesterday, executive mayor Parks Tau said: "The city annually reviews its tariffs in line with [its] tariff policy. The policy provides a broad framework within which [the] council can determine fair, transparent and affordable service charges that also promote the sustainability of service provision, taking into account the social, economic and financial imperatives of the city."

Johannesburg residents will also be hard hit by sharp increases in property rates, and water and sanitation, and refuse removal tariffs.

• Property rates increase by 6.7%;
• Water and sanitation tariffs rise by 14%; and
• Refuse removal tariffs go up by 6.7%.

Low-income earners, who are identified as Lifeline customers, will have to pay 8% more on their bills across the board.

Economist Mike Schussler described Johannesburg's electricity tariffs as very high.

"I know they get hammered by Eskom; but I'm still quite shocked. I thought it would be at around 22%," he said.

Schussler said, however, that Johannesburg's ratepayers received better services compared to other cities.

"We still get something, compared to other cities. I haven't been to all the other cities, but I believe we are better off. I have a lot of faith in Tau and believe he will do a good job."

The city's DA finance spokes-man, Patrick Atkinson, said: "The city can't afford the budget. In March the city was R600-million behind budget and our collection rate was 86%, well below the minimum of 94%."

Of the R33-billion, R29.4-billion will form part of the operational budget, while the remaining R3.7-billion will go to the council's capital budget.

The previous financial year's budget was around R28-billion. The city's finance chief, Geoffrey Makhubo, said the increase was inflationary.

Tau said the operational budget would focus on traffic management, fixing of potholes, reduction of power outages, repairing of street lights, cleaning of informal settlements and improving access to health services for the elderly.

The capital budget, he said, would focus on infrastructure projects, including the development of Alexandra Hostel and Baragwanath Central Precinct, installation of pre-paid electricity meters across the city, upgrading of sewer and water infrastructure and implementation of phase 1B of the Bus Rapid Transit system.

The city's most critical entities - City Power, Joburg Water and Pikitup - received the lion's share of the budget, a total of R17.5-billion.

The city is still trying to recover from a financial crisis that almost brought it to its knees in 2009 when it was forced to slash its budget by more than R1-billion to finance the completion of Soccer City ahead of the soccer World Cup.