Municipal Taxation - Vacant Gardens and Property Rates

The purpose of this article is to explain the laws and policies that determine how property rates and other services are charged to erven that do not have residential homes on, but form part of the garden of a person’s residence.

Typical Example

The problem discussed in this article most commonly arises where a person’s home is comprised of more than one erf, and only one of the erven has the house build upon it (the other erf or erven being vacant and simply forming part of the garden that surrounds the home). It is necessary to distinguish at this point between situations where all of the erven concerned are notarially tied, as opposed to situations where they are not.

Notarial Ties Explained

A notarial tie is an act of registration that happens in the Deeds Office in terms of which certain erven that are contiguous (i.e. share a common border) and are located in the same township (suburb) are bound together such that they cannot be sold to third parties individually, without the others that they are tied to. In order to create a notarial tie one would need consent from the local authority (the Municipality) and the assistance of a Conveyancer to draft and register the notarial tie agreement against the title deeds of the properties concerned. If the properties are bonded then the consent of the bondholder will also be required before the notarial tie can be registered.

In most cases the registration of a notarial tie agreement against the title deeds of the properties concerned will result in the value of those properties collectively dropping somewhat. This is because the properties are no longer capable of being sold off individually and must be sold together as one big property.

Where there is a notarial tie

If the various erven are notarially tied it is the City of Johannesburg Metropolitan Municipality’s (“COJ”) policy to treat all of the erven concerned as if they were one big consolidated erf. The result of this is that the homeowner will be charged only once for rates (calculated on the cumulative value of all of the erven) in connection with one account (which is usually an account created in respect of the erf on which the house sits), as well as only once (again usually in connection with that same erf) for refuse removal services and water and/or electricity services, and sewer services, at the residential rate.

This precludes the duplication of charges for sewer and refuse services (by the levying of such charges only once, as if the property consisted of one large consolidated erf rather than by the levying of separate sewer and refuse charges for each of the individual erven).

If this policy is not applied and each of the erven were treated individually as if they were not notarially tied together and forming part of one dwelling, each stand would then receive a separate rates account with property rates based only on the value of that stand alone, together with refuse collection charges as well as sewer availability charges.

In extreme cases the municipality will charge the property owner for electricity and/or water services by linking those services to one of the erven that form the garden rather than the erf on which the house sits.

The result of this is often that because the vacant garden erven are classified as “vacant” rather than “residential” in the municipality’s records, the services will be charged for at the vacant land rate, as opposed to the lower tariff applicable to residential properties.

This can be a very serious problem for property owner as the charges for rates and sewer based on the vacant land tariff are significantly higher than the charges would have been on the residential tariff.

How to remedy the situation

The first step is to determine whether your properties are notarially tied. If they are then you need to lodge a Section 78 inquiry with the municipality’s Valuation Department asking for the municipality to consider all of the properties concerned as one property and to rate the property and to charge services for that property only on the stand on which the house sits, and all at the residential rate. This should trigger the property appearing on the next property valuation roll, which will allow the property owner to (if necessary) lodge an objection to the manner in which all of these properties are classified (because they will probably be classified as vacant stands because although they form part of the garden, where there is no house built on them they might then be classified on their own as vacant.

Conclusion

The manner in which the municipality charges for rates and services in relation to homes that consist of more than one erf, is relatively complex and there are many reasons why invoices in relation to same may not be correct.

If you are of the view or you suspect that you are being overcharged or otherwise incorrectly charged by the municipality in this regard, contact your attorney for assistance immediately.

The sooner that you take action the sooner the problem will be resolved and your charges will drop, alternatively the sooner you act the more likely it is that you will be able to obtain a refund retrospectively of amounts that you have historically been overcharged (although there is no guarantee in any situation that you will indeed be entitled to or receive a retrospective refund, as whether this is applicable depends on the facts of each case).

Source: Chantelle Gladwin, Partner and Gabriel Da Matta, Associate

Courtesy: The Agent - Estate Agency Affairs Board