Real estate industry representatives have officially lodged an objection to a piece of national legislation which could have disastrous consequences for South Africa’s property market.
Dubbed the Property Rates Amendment Bill, the new legislation could effectively compel those who own more than one property to pay commercial rates for additional properties.
According to government, the Bill was apparently put forward for ‘well publicised public hearings’ in 2010 and was officially gazetted for comment on June 9th. However, the real estate industry at large has reacted with shock, claiming to have only become aware of the proposed Bill in mid-July, shortly before the cut-off date for objection submissions on July 22nd 2011. Bryan Biehler, MD of Huizemark property group and an instrumental driver behind the objection says the manner in which the Bill was introduced is reprehensible. “It appears to be a deliberate and pre-orchestrated attempt by government to try and pass a highly controversial piece of legislation unnoticed,” Biehler alleges.
Adds Biehler: “There are in excess of over 1, 5 million properties currently being leased in South Africa. Should the Bill go ahead, these rental properties would, in all likelihood become unaffordable for people who cannot, or choose not to qualify for mortgages. Only the super wealthy would be able to afford second properties and the property market, which is already depressed, would go into a free-fall.”
Berry Everitt, MD of the Chas Everitt property group was reported as saying the Bill is an ill-conceived and even dangerous piece of legislation that would not only cause havoc in the property market if it were enacted as it stands, but could also cause the already delicate relationship between ratepayers and many local authorities to break down further. Following the initial outcry by various property entities and representatives, Deputy Minister Yunus Carrim issued a statement that the Bill had been misunderstood and that owners would not have to pay commercial rates on additional properties.
“The intention is to ensure that guest-houses, bed-and-breakfast establishments, small hotels and the like pay commercial rates. If necessary, we will amend the draft to make this clearer before submitting the Bill to parliament,” stated Carrim.
His comments have not mollified the real estate industry. On July 20th, attorneys Cliffe Decker Hofmeyr formally submitted an objection to the Bill of behalf of the Institute of Estate Agents of South Africa (IEASA), the Estate Agents Holding Company Limited and the Estate Agents Joint Venture KZN.
In a nutshell the objection calls for transparency and a thorough overhaul of the Bill through “due process and not merely by a ministerial statement.”
Concludes Biehler: “We are already fielding requests by investors to sell their rental property which is an indication of things to come should the Bill be passed. It’s high time that Government acted responsibly and considered the economic and social ramifications of property legislation before ploughing ahead willy-nilly. Doing so threatens the interests of this vital sector which contributes about 8% to GDP and sends a very negative message to the rest of the world where property rights are sacrosanct.”