Outrage in CPT over tariff hikes - how your property value is now linked to utility fees

The increase in property prices and resultant municipal valuations in Cape Town show no sign of letting up.

Home-owners have been expressing their anger on social media and in letters to the press since the City's announcement of new tariffs, some of which will now be linked to property value.

While the official average rates hike from July is just under 8%, the effective increase faced by property owners will vary widely.  (Click here to access the City's rates and tariffs calculator)

Property economist, Professor Francois Viruly, explains how this will work.

It's not the actual rates and taxes that are changing so much but the associated fees or utility costs, he says.

"Where that increase is really coming from is from the water and sanitation, from refuse collection. What the City is saying is that these services will now become a function of the value of your property, which wasn't the case before this year."

Prof. Francois Viruly, Property Studies - UCT

"On average, rates and taxes are going up by 7.9%  and then we start to see a sort of progressive tax system playing itself out here - what is really happening is, if your property is worth R750 000, you end up with an increase of about 6%. If you own a property of R6 million, you'll have an increase of about 23%."

Prof. Francois Viruly, Property Studies - UCT

Prof. Viruly highlights the 3%-plus population growth of the rapidly expanding city.
Out of around 4.7 million residents, he says, 1.7 million live in informal settlements.

Also, 70% of Capetonians earn R22 000 and below, which means they could own a property of up to R800 000. 

"If you have a property valued below R450 000 you don't pay rates and taxes, and we're seeing growth in that part of the market."

Prof. Francois Viruly, Property Studies - UCT