Municipality rates and taxes are a contentiously debated issue amongst many property owners who are obliged to pay them. The contention is aggravated by dire economic conditions and the perceived disservice by many local councils in municipalities.
This article seeks to discuss the recent law regulating the payment of municipal levies and if it is a wise and economic precaution to illegally use your property contrary to its authorized zoning use and municipality valuation roll.
This will be done by having a closer look and discussion of the Supreme Court of appeals judgement in the matter between City of Johannesburg Metropolitan Municipality v Zibi and Another  JOL 50733 (SCA).
Immovable property: a need for housing and commercial interests. A human right for all beings. To those who own immovable property, it is often doubtful how precious of a treasure such property is and how dear it is. It is unfortunate that others do not necessarily share the same endearing view when it comes to our properties– well, perhaps for reasons objectively valid.
All immovable property owners have to pay for rates, taxes and levies relating to their properties. Such levies are paid to the municipality for its services in the provision of water, sewerage, refuse collection, road maintenance and street light maintenance. The amount charged for each immovable property depends and is calculated on according to the land value and any improvements/buildings added to it, based on the property’s market value and its use, be it residential or commercial.
Many persons may feel that their rates are too expensive especially given the current economic hardships and that they may also feel that the local municipality is not really meeting its end of the bargain by providing proper services. Others opt to commercialize their residential properties by renting them out to students and other accommodation seeking classes. This is often done to cushion the economic hardships and earn an added income. Sadly, such use is habitually embarked on without the consent of the local authorities. The question is: to what end? What are the consequences regardless of the reasons?
The Supreme Court of Appeal recently answered that question in the case of City of Johannesburg Metropolitan Municipality v Zibi and Another  JOL 50733 (SCA).
FACTS OF THE CASE
In this matter, a couple bought property during the middle 2013. The free-standing property had a house consisting of five bedrooms, two bathrooms, a living room, a double garage, and an outside room with a toilet. They lived there with their minor children. At the local municipality, the property was zoned as “Residential I” paying minimal monthly levies for residential properties.
At the beginning of 2015, the owners started renting out two bedrooms to “students and young professionals”. They essentially started using their residential property as a commune, which is a commercial concern, and this was done without the consent of the local municipality. The municipality consequently started penalizing them, they had to pay R3 592.05 instead of R898.01 in monthly levies as a penalty for using the property in contradiction to its zoning.
ISSUES TO BE DECIDED BY THE COURT
The court had to decide whether the municipality can levy a rate in the form of a penalty on residential property for illegal or unauthorized use, without first changing the category of the property on its valuation roll or supplementary roll from “residential” to “illegal or unauthorized” use?
THE LAW AS APPLIED BY COURT
The court recognized that section 3 of the Local Government: Municipal Property Rates Act 6/2001 (MPRA) authorizes municipalities to adopt rates policies, and that the municipality can levy punitive rates on residential property for illegal or unauthorized use. Worthy of cognition is that the SCA majority held that the municipality can penalize illegal/unauthorized use as long as it does so as part of a validly adopted property rates policy.
The court also noted that “penalty charges levied under “illegal use” or “unauthorized use” are directed against a landowners illegal conduct, and not the property”.
The municipality won the case.
This basically means that it does not necessarily matter under what roll and zoning is the municipality classed, the question for the municipality to consider when enforcing its rates policy is: what the property is being used for, and what is it authorized to be used for.
Notwithstanding the hard economic challenges or the perceptions that the municipalities are perhaps not earning the monthly levies paid monthly by property owners: rates, taxes and levies must be legally paid. It may prove wise for an aggrieved property owner to contact expert lawyers to assist them with zoning issues for their specific or required property usage and also to assist with lawfully recognized objections procedure to municipality rates and taxes increase. This is important in order for property owners to avoid being loggerheads with the law.
- Local Government: Municipal Property Rates Act 6 of 2001.
- City of Johannesburg Metropolitan Municipality v Zibi and Another  JOL 50733 (SCA).