Sunday Argus

Fears that proposed Property Rates Bill fails to address rates issues

While the motivation behind the Property Rates Bill is supported by the property industry, there

are doubts as to whether it will address the problems municipalities and law abiding owners are faced with. That's the view of Alyce Collins, of Collins Real Estate, who has been involved in sectional title blocks for over 12 years.

While applauding the effort by Minister Sydney Mufamadi's Department of Provincial and Local Government to tidy up sectional title laws by replacing 138 pieces of legislation with a single act to facilitate the collection of rates and service fees, Collins believes the proposed bill does not go far enough.

"Among the larger sectional title buildings in Pretoria, Johannesburg, Durban and East London a culture of non-payment of levies and bonds has developed. Whole buildings now stand derelict and sick because rates aren't paid, services disconnected and banks have repossessed hundreds of units. But the nature of the beast is that because there are no buyers for units in buildings which are unserviced , the banks and municipalities are left holding the bag for millions of rands," she said. "The new Property Rates Bill is supposed to solve this problem by now permitting the municipalities to sue the individual sectional title owner for unpaid services, but you can't cut off the service to an entire building because one owner does not pay."

Conversely, Collins says, under the current conditions, those law abiding owners who have diligently paid their levies and bond instalments suffer because ineffectual or non-existent body corporates have not paid municipal rates and services or even insurances for their buildings, usually because they have failed to collect levies from all the owners. "Consequently we see individual, responsible owners losing their investment. Although the law requires that a body corporate be formed, there is no mechanism to ensure that it conducts its business diligently, or even that it operates at all. This is why we have seen the growth of independent third parties appearing on the scene who are charged with the responsibility of collecting levies and paying the rates."

She said there does not appear to be any pro-active machinery envisaged in the proposed new bill to enforce such an appointment.

She said Cape Town had been largely fortunate in escaping the culture of non-payment. But some blocks were giving problems and should owners adopt the culture of non-payment, the body corporates concerned acted boldly and eject those owners who failed to pay.

Sectional title specialist lawyer Tertius Maree agreed with Collins. Pointing out that the Sectional Titles Act does make provision for the appointment of an administrator, the problem is that these appointments are often made too late to salvage the building financially. He said municipalities were partly to blame as they did not favour the appointment of administrators and allowed debts to escalate. He said a body corporate which is unable to govern itself, should be placed under a new form of administration supervised by the municipality.