Municipal rates and taxes

Once your newly-purchased home registers in your name, your local council will start billing you for rates and taxes relating to your property. These fees become applicable when the property registers in your name, regardless of whether you have moved in or not.

Rates and taxes are fees paid to the authority that services your property, i.e. your local municipality. These funds are used to pay for municipal services like sewerage facilities, road maintenance, street light maintenance, and refuse collection.

You are responsible for opening your municipal account at your local council and paying a consumer deposit. Ensure that you provide the correct billing address; if you do not receive the statement every month, you must enquire at the council to rectify this. Remember to start paying an amount from the first month, even if you have yet to receive your account, to ensure that you don’t end up with a huge bill to settle once your account is sorted out.

What you need to know about managing your municipal bill

You may find the municipal bill confusing if you are a first-time buyer or have moved to a different municipal area. Terminology differs from one municipality to the next, so they may use new terminology that you are not acquainted with yet. To understand what it all means and what you are being billed for, let’s look at all the information you may come across.

When you own property, you will receive water, electricity, and waste removal services. Your municipal account includes these fees and the property taxes you must pay.

Let’s look at each of these items and why you are paying for them:

Water – If you are on a domestic metered account, you get the first six kilolitres (kl) of water you use each month for free. The council charges a stepped tariff per kl based on how much water you use, so the more water you use, the more expensive it gets. If you have a prepaid water meter, there will be no water usage charge on your municipal account.
Electricity – If you are on a metered account, you will be charged based on how much electricity you use. However, if you are on prepaid electricity like most new households, there will be no electricity usage charge on your municipal account.
Sewerage or wastewater.
Refuse removal of solid waste.
Rates and taxes are also called assessment rates. Your municipal account will give you a detailed breakdown of the property tax you have to pay.

How are municipal rates calculated?

Each municipality has their tariffs, which are used to calculate their rates. The basic calculation is: house value – rebate * rate / 12 = the monthly amount payable to the council.

Here is an example of all the major municipalities where we develop houses using a house value of R1 000 000.

City of Joburg	Emfuleni Local Municipality	Midvaal Local Municipality	City of Tshwane	Ekurhuleni Metropolitan Municipality	Mogale City Local Municipality
R1 000 000 (house value)– R350 000 (rebate) x 0.008619 (tariff)= R5 602.35 / 12Monthly amount payable is: R466.86	R1 000 000 (house value)– R135 000 (rebate) x 0.008500 (tariff)= R7 352.50 / 12Monthly amount payable is: R612.70	R1 000 000 (house value)– R135 000 (rebate) x 0.009618 (tariff)= R8 319.57 / 12Monthly amount payable is: R693.28	R1 000 000 (house value)– R135 000 (rebate) x 0.0102400 (tariff)= R7 475 20 / 12Monthly amount payable is: R622.93	R1 000 000 (house value)– R150 000 (rebate) x 0.01052 (tariff)= R8 942 /12Monthly amount payable is: R745.17	R1 000 000 (house value)– R50 000 (rebate) x 0.01467 (tariff)= R13 936.50 / 12Monthly amount payable is: R1 161.38
Note that the above rates are calculated using RESIDENTIAL TARIFFS.Vacant land tariffs are more expensive.Tariffs are subject to change every year.Rates are payable from the date of registration.The rebate amount is the discount that a council gives to all homeowners.

What if the property is bought off-plan?

Rates and taxes – The council will levy rates and taxes on a new property bought off-plan in one of two ways. If at the time of registration of the property in your name, the council has not yet completed the property evaluations; they will charge you a vacant land tariff slightly higher than the residential tariff. Once the council completes their valuations, you will switch to the residential tariff.

At this point, the council will adjust rates, so they will work out the difference between what you paid under the vacant land tariff and what you should have paid under the residential rate, which is usually slightly lower. Usually, if you pay the higher vacant land tariff, you will receive a refund or credit on your account. You will also receive a small assessment rebate that all property owners receive – the exact amount varies from one council to another.

Charges for water, electricity and sewerage connections – the council will charge you for services connected to your property, such as water, electricity and sewerage connections. These are known as basic service or availability charges, which are fixed monthly amounts.
Water usage charges – Before the council installs your water meter, they will charge you a basic fee. Once they have installed your water meter, they will switch the basic fee to metered consumption charges, and you will be charged for your actual usage based on the meter readings. If the council continues to charge you the basic charges after your water meter has been installed, they will revert to the installation date of your meter, reverse the basic charges and then charge you for your actual consumption.

All the charges and terminology on your municipal account can be confusing, especially if you are a new homeowner. Take the time to study your account and use your local council’s support line or website to help with any queries.

Lastly, please do not tamper with municipal services (e.g., electrical or water meters, water, electrical or sewerage lines, street lights, concrete around the kerb, etc.). Report any issues with these services to your local council.

Please note that this information is intended as an advisory guide only and does not replace the guidance provided by your local council. Each council uses its own terminology, and this can change without notice.

DISCLAIMER:

The recommendations herein are given in good faith and are meant to guide the user. The recommendations imply no guarantee since the conditions of use and method of application are beyond our control.