One of your unavoidable ongoing expenses as a landowner is the monthly rates bill levied by your local municipality. As high as you think your rates may be now, they could get a lot worse if you use your property for something illegal or unauthorised. That will open the door to your municipality to impose a “penalty rate” on you.
We illustrate with reference to a case in which Johannesburg property owners faced a quadrupled rates bill after they let out two rooms in their house to students without municipal authority. The Supreme Court of Appeal upheld that increase, and whilst every municipality will have its own rates and land use policies, the principle is there – unlawful land use is likely to get expensive!
“The said penalty … was imposed due to the fact that the property was being used in contradiction to its zoning” (extract from judgment below)
Municipalities all have the right (and the duty) to regulate land use in their areas, and amongst other sanctions, properties that are used unlawfully or without authorisation can be subjected to rates and charges on a penalty tariff.
These penalties can be steep, and the Supreme Court of Appeal (SCA) has now held that they can be imposed without the municipality first having to change the property’s category on its valuation roll to “illegal or unauthorised” use. All it has to prove is that it acted in terms of a lawful rates policy.
The house whose rates bill quadrupled
- A house valued (on the municipality’s valuation roll) at R1,650,000 had its monthly rates bill quadrupled from R898-01 to R3,592-05.
- The municipality took this step after notifying the owners of their “wrongful and unlawful use of the property as a student commune, in
contravention of the town planning scheme and zoning thereof without the necessary authorisation.” Authorisation was necessary, said the municipality, because the commune was a “commercial concern”.
- This after the owners had let out two of their five bedrooms to “students or young professionals” and had continued to do so despite two years’ worth of notices from the municipality to terminate the unlawful use, and despite a High Court interdict against the continued contravention.
- The legal challenge mounted by the property owners against the penalties was based on a series of legal arguments, and the Court’s analysis thereof (on appeal from the High Court) will be of great interest to property professionals.
- For property owners however, the practical punchline is that the SCA upheld the penalty charges, and the owners must pay them.
If your neighbour breaches land use laws…
That punchline is also important for neighbours, because in practice unlawful land usage of this nature will often only come to a municipality’s notice when a concerned neighbour blows the whistle.
So, if you think your neighbour is about to open up an unauthorised office, commercial or other non-permitted operation next door, and if you can’t settle the matter peaceably over a cup of neighbourly coffee, call in professional help immediately. Just the threat of a quadrupled rates bill could be enough to make the problem go away.
Different strokes for different municipalities
Property owner or neighbour, find out what your local authority’s land use and rates policies are. This particular case related to the City of Johannesburg Metropolitan Municipality, and your local municipality will have its own land use bye-laws, which could well be less or more restrictive than Joburg’s.
Check the zoning before you buy property
Perhaps the property owners in this case planned all along to let out rooms, and perhaps that extra income is what put this particular house within their financial reach. If so, the mistake they made was in not checking the local zoning upfront.
Knowing the zoning and building restrictions in your chosen area is also vital if you want to avoid unpleasant surprises, like a new neighbour opening up a guesthouse or building a triple story which cuts off your sea views. Ask your lawyer to check for you before you offer.