I NCLUSI VE CI TI ES ROUND TABLE ON PRO-POOR PROPERTY RATI NG POLI - - PowerPoint PPT Presentation
I NCLUSI VE CI TI ES ROUND TABLE ON PRO-POOR PROPERTY RATI NG POLI CI ES How can municipal rates policies promote access by the poor to urban land markets? Presentation of research on property rates policies and the urban poor Alison Hickey
I NCLUSI VE CI TI ES ROUND TABLE ON PRO-POOR PROPERTY RATI NG POLI CI ES
How can municipal rates policies promote access by the poor to urban land markets?
Presentation of research on property rates policies and the urban poor
Alison Hickey Tshangana 18 September 2009 South Africa Cities Network South Africa Cities Network Braamfontein, Johannesburg
Focus on ‘how the instrument of municipal rates policy can be used
benefit from urban land markets’
1. Initial roundtable (9 July)
( y)
2. Research
3. Follow-up roundtable (18 Sept)
Provide input to review paper Provide input to review paper Review findings of case studies Deliberate on knowledge dissemination strategies 2
3
(TRPM Finmark Trust et al 2004)
Factors for properly functioning property market include: – Sufficient supply of housing stock
(TRPM, Finmark Trust et al. 2004)
To what extent i i l pp y g – Sufficient supply of end-user finance – Secure land title – Adequate number of willing sellers and buyers Ease in performing transactions can municipal property rates policy impact on these factors? – Ease in performing transactions – Information
Legal, institutional and procedural constraints to functioning land market for th t ese acto s the poor – Insufficient supply of stock – Very few formal transactions (mostly informal) – Housing ladder not active (people don’t move between markets) Housing ladder not active (people don t move between markets) – Secondary market dysfunctional:
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difficulty obtaining mun clearance certificate required of new owner
to urban land markets, can rates policy be used to tackle those barriers?
ff ti l ? H i ifi t t t
determinant of access by the poor to urban land markets?
markets in favour of the poor? markets in favour of the poor?
place to assist the poor to access urban land?
5
What are the obstacles in the implementation of these tools?
Average for six metros:
80% Rates & service h % 66% 60% 70% charges as %
Rates as % of property rates & 40% 50% p p y service charges 28% 20% 30% Rates as %
19% 0% 10%
6
Source: NT municipal database 2005/06 Outcome 2006/07 Outcome 2007/08 Outcome 2008/09 Outcome Budget Year 2009/10 Budget Year 2010/11 Budget Year 2011/12
Tax incidence: inequitable spreading tax burden among categories
By imposing unaffordable tax burden, prompting eviction or inability
to move up housing ladder
By impacting market behaviour: affecting prices and land use
decisions by property owners
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Potential instruments Potential instruments in municipal property rates to
in municipal property rates to promote access by the poor to urban land markets promote access by the poor to urban land markets promote access by the poor to urban land markets promote access by the poor to urban land markets
Direct tax relief for poor Demand-side means: Direct tax relief for poor
Increasing affordability? Indirect property rates instruments to impact market
behaviour
Impact of differential rates on pricing of property categories
Special rating areas Supply-side means: Other planning and zoning instruments Improve stock of available affordable land/housing?
8
9
Average rates and services revenue as %
14% 16% 18%
2005/06 Outcome 2006/07 Outcome
8% 10% 12%
2007/08 Outcome 2008/09 Outcome
2% 4% 6%
Budget Year 2009/10 Budget Year 2010/11 Budget Year 2011/12
0%
C a p e T
n E k u r h u l e n i e T h e k w i n i J
b u r g M a n d e l a B a y T s h w a n e A v e r a g e g
10
N e l s
M Source: NT municipal database.
2009/10 for 6 metros: 12% of monthly household income
y spent on rates and service charges
However many cities set the cut off for indigent support at an However many cities set the cut-off for indigent support at an
income level equal to two social pensions (R2020).
poor/lower-income households whose income exceeds limit for indigent register, and whose property values may exceed the residential exclusion.
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Section 17(1)h: First R15 000 of residential property Section 17(1)h: First R15 000 of residential property exempt from rates exempt from rates exempt from rates exempt from rates
R 0.009 R 0.010 R 140,000 R 160,000
R 0.004 R 0.005 R 0.006 R 0.007 R 0.008
ential rate
R 60,000 R 80,000 R 100,000 R 120,000
eable exclusio
R 0.000 R 0.001 R 0.002 R 0.003
n g e y n i n i t y g z i
Reside
R 0 R 20,000 R 40,000 R 60,000
Non-rate
C a p e T
n J
a n n e s b u r g T s h w a n e N e l s
M a n d e l a B a y e T h e k w i n i E k u r h u l e n i B u f f a l
i t y M a n g a u n g M s u n d u z i
Residential rate Non-rateable exclusion for residential property R'000
Msunduzi rate is R0.0075, net of residential reduction from ‘general rate’
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Source: Municipal rates policies. Own calculations. Tshwane rate is R0.0066105, net of 35% reduction from quoted residential rate Mangaung gives R100 000 exclusion for indigents. Msunduzi gives R130 000 exclusion for indigents.
1,200,000 1,000,000 , , alue (R) 2003 600,000 800,000 nsaction va 2004 2005 2006 2007 200 000 400,000 verage tran 2008 2009
Johannesburg Buffalo City Av
13
Source: Centre for Affordable Housing Finance in Africa
g y
Thresholds for residential exclusion differ widely: up to R150 000 – Joburg: prior collection rates for low-value properties; aim is to continue relief to same group – BCM: adopted from MPRA
Originally intended to exempt RDP house but not kept pace with subsidy
Originally intended to exempt RDP house but not kept pace with subsidy amount – Logical link between RE and value of RDP house; alignment of policy – Amount of subsidy climbed from R15 000 in 1994 to current R55 706
Also not kept pace with input costs or estimated re-sale price of RDP house – Input costs: top structure approx. R65 000; land and servicing approx. R40 000 Re sale restricted; prices anywhere from R7 000 R50 000 – Re-sale restricted; prices anywhere from R7 000 – R50 000
➨ RDP beneficiaries in some municipalities liable for rates while beneficiaries in
neighboring municipalities may be exempt.
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g g p y p
What is estimated income level of property owners with properties R150 000 and below?
Household income (R/month) Monthly payment as share of monthly income Monthly payment (R) Affordable bond (R) 1000 20% 200 19,766 1500 20% 300 29 649 1500 20% 300 29,649 2000 25% 500 49,414 2500 25% 625 61,768 3000 25% 750 74,122 3500 25% 875 86,475 4000 30% 1200 118 595 4000 30% 1200 118,595 4500 30% 1350 133,419 5000 30% 1500 148,243 5500 30% 1650 163,068 6000 30% 1800 180,292 6500 30% 1950 195 316 6500 30% 1950 195,316 7000 30% 2100 210,341 7500 30% 2250 225,365
Assuming 10.7%interest rate; 20 year loan; National Credit Act requirements re: bond payment as share of hh income.
15
Source: NDOH (2008). “Investigation into the perceived impact of market distortions ostensibly created with the residential housing market as a result of government subsidies.” 30 June 2008. Prepared by Kecia Rust with support from Illana Melzer and Ria Moothilal. Own calculations.
R 90 R 60 R 70 R 80 R 90 rty rates
Case 1: Residential property - R50 000
R 30 R 40 R 50 R 60 hly proper
Case 2: Residential property - R100 000
R 0 R 10 R 20 Month
Case 3: Residential property - R150 000 16
Source: Municipal rates policies. Own calculations.
Sh f l i ll d b f i Sh f l i ll d b f i
Joburg current valuation roll: 794 000 properties; approx. R679 billion
– 76% of properties are residential (65% of R value of total roll)
Share of valuation roll and number of properties Share of valuation roll and number of properties
Of residential properties, 32% are valued R150 000 or less
– Residential exclusion completely eliminates rates liabilities for 32% of residential prop
Total R value of res properties R150 000 or less is R11 6 billion
Total R value of res properties R150 000 or less is R11.6 billion
– 3% of R value of res properties – 2% of R value of entire roll
Share of total R value of residential properties Share of total n mber of residential properties Share of total R value of residential properties (R440 982 598 065)
Residential properties valued R150 000 or less 3%
Share of total number of residential properties (601 526 properties)
Residential properties valued R150 000 or less 32% Residential properties valued
97% Residential properties valued
32%
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68%
Johannesburg: Johannesburg: Number of transactions in price bands R150k and below Number of transactions in price bands R150k and below
10000
Number of transactions in price bands R150k and below Number of transactions in price bands R150k and below
7000 8000 9000 10000
sactions
E: R100K to R150K D: R50K to
3000 4000 5000 6000
er of trans
R100K C: R15K to R30K B: R1 to R15K
1000 2000 3000
Numbe
B: R1 to R15K A: NO PRICE 2003 2004 2005 2006 2007 2008 2009
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Source: Centre for Affordable Housing Finance in Africa
30000 35000 40000
ions
20000 25000 30000
JHB
5000 10000 15000
Number BCM
2003 2004 2005 2006 2007 2008 2009 19
Source: Centre for Affordable Housing Finance in Africa
Johannesburg: Johannesburg: Share of total transactions in each price band Share of total transactions in each price band Share of total transactions in each price band Share of total transactions in each price band
100% > R150k 70% 80% 90% 50% 60% 70% R15k - R150k 20% 30% 40% R0 - R15k R15k - R150k 0% 10% 2003 2004 2005 2006 2007 2008 2009
20
Source: Centre for Affordable Housing Finance in Africa
BCM: Number of transactions per price band BCM: Number of transactions per price band
4500 3500 4000
tions Greater than R150K
2000 2500 3000
R150K R15K to R150k
1000 1500
Number o R0 to R15k
500 2003 2004 2005 2006 2007 2008 2009 21
BCM: Percent share of total transactions BCM: Percent share of total transactions per price band per price band per price band per price band
100% 70% 80% 90%
tions Greater than R150K
50% 60% 70%
R150K R15K to R150k
20% 30% 40%
Number o R0 to R15k
0% 10% 2003 2004 2005 2006 2007 2008 2009 22
Rebates for senior citizens and people with disabilities Rebates for senior citizens and people with disabilities
Some municipalities limit themselves to the minimum in rebates
and exemptions, while others apply more generous and p , pp y g innovative rebates
Seven SACN muns have sliding scale, with varying number of
blocks
– Rebates from 10% - 100%; typically for hh with income < R8000
Can be combined with condition related to property value Frequently linked to OAG and disability grant; also cover those Frequently linked to OAG and disability grant; also cover those
who don’t receive grant but can demonstrate same income level
How to protect those who are income-poor, asset-rich?
– JHB: Rebate limited to R1.5 m property or less JHB: Rebate limited to R1.5 m property or less – BCM: 40% rebate for seniors with income R2020 (over and above R61 indigent subsidy for rates which covers R165 000 property)
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Rebates for senior citizens and people with Rebates for senior citizens and people with disabilities disabilities disabilities disabilities
R2020 (OAG x 2 ) 120% Cape Town J h b 80% 100% Johannesburg Tshwane Nelson Mandela Ek h l i 40% 60% Rebate Ekurhuleni Msunduzi BCM R2020 (OAG x 20% 40% R2020 (OAG x 2) 0% 2000 4000 6000 8000 10000 Monthly household income (R)
Mangaung rebate to be implemented in July 2010 eThekwini exempts seniors and people with disabilities from paying
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Mangaung rebate to be implemented in July 2010. eThekwini exempts seniors and people with disabilities from paying any rates on the first R400 000 of property value; no limit on the maximum value of property in order to be eligible. Source: Municipal rates policies. Own calculations.
Rebates for indigent households Rebates for indigent households
Typically those on indigent policy 100% exempt
Other two options: p
Different approach in Joburg: Expanded Social Package
income, including access to services.
package available to each band. package available to each band.
applicable for each household.
Link between indigent policy and property rates policy – Example of BCM:
R165 000
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How do rebates improve affordability for poor How do rebates improve affordability for poor households? households? households? households?
Take the case of an elderly couple over 65 years of age with residential property valued at R100 000; registered as indigents if qualify…
In other muns, zero (or very small) rates liability due to regular residential exemption or increased exemption for indigents
Significant variation between muns: If earn R80/month addtl to OAG, property rates bill could be anywhere from zero to R38/month (1.8% of their income) could be anywhere from zero to R38/month (1.8% of their income)
)
1.6% 1.8% 2.0%
R2020 (OAG x 2)
Tshwane BCM 0.8% 1.0% 1.2% 1.4% s share of househo Tshwane NMB 0.2% 0.4% 0.6% Monthly rates a
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0.0% 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Monthly household income (R)
Source: Municipal rates policies. Own calculations.
Joburg: – 2008/09: approx 4500 pensioners received rebate Very difficult to compare recipients to total number eligible – Very difficult to compare recipients to total number eligible
BCM: – 2008/09: 130 rebate applications – Due to outreach and awareness-raising efforts, No. of applications i d i 2009/10 14 9 increased in 2009/10 to 1479
– Reliance on councillors and ward committees – 2-month indigent registration campaign, Operation Xhamla, in early g g p g , p , y 2009
city officials to communities, particularly in rural areas.[9]
Buffalo City 2008/09 2009/10 Pensioners 126 242 Persons with disabilities 4 3 People with income equal or less than R2020 (who are not disabled or pensioners) n/a
n/a 1 R b t d t il bilit f i 1233
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Source: BCM Rates Dept. Rebates due to non availability of services 1233 Total number of rebates 130 1479 Total Rand amount of rebates given R 90,372 R3 892 093
How does indigent register compare How does indigent register compare to eligible population? to eligible population? to eligible population? to eligible population?
2001 Census: 28% in BCM no income; another 7% with monthly
income below R4800
2006 EC survey: 53% of households live on monthly income less than
R1,500 (Source: BCM Indigent Policy )]
Estimating coverage of the indigent register:
g g g g
(82% urban), or 8% of BCM population] E b th t ti ti t thi t ll
portion of eligible population
➨ Although updated 2008-09 survey data not available scale of the gap ➨ Although updated 2008-09 survey data not available, scale of the gap
is large enough to conclude that a high number of eligible poor people are not accessing available property tax rebates.
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Revenue foregone for residential exclusion is function of:
Joburg:
Revenue foregone due to R150 000 residential exclusion was R89.1 million (in comparison to estimated total property rates revenue of R3.95 billion in 2008/09)
by 2% or R70 million, and take 19 000 rate-payers off the database
Source: PWC 2009 Report Source: PWC 2009 Report
BCM:
total rates revenue total rates revenue
➨ Analysis of collection rates of different property value bands is critical
to determining residential exclusion
➨ Revenue foregone itself not significant but
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➨ Revenue foregone itself not significant, but…. ➨ …total cost to municipality includes admin costs, public awareness
campaigns
Direct property tax relief Select municipal examples Benefits Costs or Downsides relief instrument examples
Rebate based on monthly income i l
C T S i iti d Improved targeting of vulnerable group (reduce Revenue foregone (but may be small if collection rates low)
– single or multiple tiers/ blocks
Variation: Cap property value for li ibili f Cape Town: Senior citizens and disabled persons receive 100% to 10% rebate based on monthly income (R8000 or below) – 9 tiers vulnerable group (reduce errors of inclusion) In case of multiple blocks, sliding scale increases accuracy of targeting Low coverage/take-up due to requirement that residents come forward to apply Financial and institutional costs related to administrative burden of: eligibility for rebate. y g g
Exemption on rateable
Mangaung: Child-headed households exempt for Means test not required Same as above Less accurate targeting of benefit: Provides
property for vulnerable groups
households exempt for properties with value up to R100 000 Ease of administration compared to % rebate Less accurate targeting of benefit: Provides same maximum benefit to all, regardless of income Revenue foregone (larger than for rebate)
Residential exclusion for all ratepayers
eThekwini: Rates are not levied
residential property Low administrative costs (automatically applied to rates accounts) Applied to everyone: potential errors of inclusion (e.g. high-income property owners residing in low value houses) Assumes property value as proxy indicator for
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Assumes property value as proxy indicator for income (this problem is rectified if this measure is combined with means test)
➨ Muns must consider trade-offs between the various methods
for providing direct property rates relief to the poor
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32
Highest is Tshwane: R0.0452, approx 6.8 times
0.04 0.045 0.05
Rand)
7.0 8.0
ential rate Rate for vacant land Ratio to residential rate
R0.0452, approx 6.8 times residential rate
Joburg provides 50% rebate if land can’t be
0.02 0.025 0.03 0.035 0 0
ant land (Cent in the
3.0 4.0 5.0 6.0
vacant land to reside
rebate if land can t be developed because Council not provide services.
0.005 0.01 0.015
n g e y n i n i t y g Rate for vaca
0.0 1.0 2.0
Ratio of rate for C a p e T
n J
a n n e s b u r g T s h w a n e N e l s
M a n d e l a B a y e T h e k w i n i E k u r h u l e n i B u f f a l
i t y M a n g a u n g
Source: Municipal rates policies. Own calculations.
eThekwini also gives R30 000 reduction
Msunduzi: vacant land valued < R60 000 gets 100% rebate
p p
33
CT and Mangaung: no differential rate
Note: Tshwane effective residential rate net of 35% rebate.
Levy addtl rate on property in geographic area for purpose of
raising funds for improving or upgrading services in that area raising funds for improving or upgrading services in that area
Possible use of SRA as means to target rates relief to the poor?
poor households/properties
households quickly, without requiring an application process and means tests and means tests.
‘stickiness’ of benefit, difficult to remove once in place
34
Potential negative impacts of SRAs on the poor Potential negative impacts of SRAs on the poor
MPRA only requires ‘consent of the majority of the members of the local community in the proposed SRA who will be liable for paying the addtl rate’ community in the proposed SRA who will be liable for paying the addtl rate Section 22(2)
Possible negative impacts of SRA on poor:
Possible negative impacts of SRA on poor:
– Low-income households cannot afford addtl levies – HHs earn too much to qualify for exemption, still cannot afford addtl levy, but
– Increased segregation in urban areas and inequality in levels of service g g q y
Mitigation strategies:
– Incorporate a clause in SRA policy stating all those eligible for rebates under the municipality’s rates policy also exempt from any additional SRA levies (e.g. CT) – Limited SRAs (discretion of Council) – eThekwini: Increase majority required to 66% of owners; 51% property value – Allow smaller percentage to disestablish SRA – Minimum size of SRA (No. of properties and value)
35
Examples of geographic targeting: Joburg Examples of geographic targeting: Joburg
40% inner city rebate in Johannesburg
80% of the floor space on the property is being used for residential 80% of the floor space on the property is being used for residential accommodation [1]
residential use but were being hit by the higher commercial rate.
area?
20% sectional title rebate – automatic – Mainly advantages non-poor
properties under R150 000 are free-standing
properties valued over R150 000 who will benefit from 20% rebate properties valued over R150 000 who will benefit from 20% rebate
Rebate also applies to properties which are part of a development with density greater than 70 dwelling per hectare
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Summary and concluding thoughts I Summary and concluding thoughts I
Residential exclusion is powerful pro-poor instrument p p p
Applying indirect instruments: Some municipalities bolder than others:
innovative instruments with potential to promote densification, revitalisation, economic growth
Challenges:
p g y p p y decision-making factors considered by developers and property owners when buying, selling or making land use decisions on property
discrimination
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discrimination
Summary and concluding thoughts II Summary and concluding thoughts II
Monitoring of implementation of the Act by municipalities is critically important
– Shift from compliance to how ratings derived and their subsequent impact on th the poor
– NT municipal budget format reform will assist to support implementation of Act p g pp p
Need to examine impact of entire taxation system on access by the poor to urban land markets land markets – Pricing of tariffs – Transfer duties: 5% for properties valued R500 000 to R1 million – Prohibiting upward
movement in housing ladder?
VAT h d l b ilt h
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– VAT charge on developer-built houses
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Johannesburg Johannesburg Buffalo City Buffalo City
2500 3000 3500 ns
600 700 s
1500 2000 2500 ber of transaction
A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K 300 400 500 ber of transactions
500 1000 Numb
100 200 Numb
2003 2004 2005 2006 2007 2008 2009
2003 2004 2005 2006 2007 2008 2009
40
6,000,000
2007/08
4,000,000 5,000,000
nue (R'000) 2007/08 2008/09 2009/10 2010/11 2011/12
2,000,000 3,000,000
erty rates reven
1,000,000
Prope C a p e T
n J
a n n e s b u r g T s h w a n e N e l s
M a n d e l a e T h e k w i n i E k u r h u l e n i B u f f a l
i t y M a n g a u n g M s u n d u z i
41
Source: 2009/10 municipal budgets. 2008/09 estimated forecast. 2009/10-2011/12 budgeted. N
18,000,000
Service charges
12,000,000 14,000,000 16,000,000
nue (R'000) Service charges Property rates
6 000 000 8,000,000 10,000,000
timated Reven
2,000,000 4,000,000 6,000,000
2009/10 Est Cape Town Johannesburg Tshwane elson Mandela eThekwini Ekurhuleni Buffalo City Mangaung Msunduzi
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Source: 2009/10 municipal budgets. Jo Nels
Property tax circuit breakers = tax relief measures to provide
households with direct relief that increases as their household households with direct relief that increases as their household income decreases (Bowman, et al, 2009) – Threshold: set percentage of income which tax must exceed before tax relief kicks in
R1000 of income, etc.
– Sliding scale Sliding scale
to 0% for higher income brackets
B t d l t f i it b k f SA l
Bowman supports development of circuit breaker for SA as long
term solution, but requires more comprehensive accurate date on income before implemented (Lincoln Instit, 2009)
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Metro Household municipal bill - 0.5% property rate in year 1 20% me
Municipal bill (rates and tariffs)
considered affordable if 15%
10% 15% 20% household incom Property rates Solid waste Electricity Sanitation Water
considered affordable if 15%
A t t l bill f
0% 5% ent
dle dle gh gh % of monthly
Average total bill for
households relative to average household income A di t NT d t f
Indigen Very poo Poo Low middle Middle Hig Very high
– According to NT data for six metros (2008):
2003/04 and 2006/07
PDG affordability analysis for dplg 2003/04 and 2006/07
y y p g (2004): recommended R0.015 limit
matter more for affordability than
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matter more for affordability than property rates
Source: PDG (2004). “Final Report: Comparative Tariff Analysis.” June 2006. Report prepared by pdg Source: PDG (2004). “Final Report: Comparative Tariff Analysis.” June 2006. Report prepared by pdg for City of Johannesburg: Corporate Planning Unit. for City of Johannesburg: Corporate Planning Unit. Very poor (< R969): informal settlements, backyard shacks, or inner city flats Very poor (< R969): informal settlements, backyard shacks, or inner city flats Poor (R969 Poor (R969-R1938): new RDP suburbs or established townships R1938): new RDP suburbs or established townships
45
Poor (R969 Poor (R969 R1938): new RDP suburbs or established townships R1938): new RDP suburbs or established townships Lower middle(R1938 Lower middle(R1938-
R4240): more established formal townships, formal single detached dwelling, frequently with backyard shacks frequently with backyard shacks
Land value increment taxation: tax on increase in land value caused by public interventions, usually the installation of services and infrastructure – limits speculation and recovers value – May be levied when zoning changes are approved e.g. Planning Gain Supplement (PGS) – May be levied on sale of land when done within certain period of being purchased
Development and zoning levies Development levy: payment for connection to services and infrastructure – Development levy: payment for connection to services and infrastructure – Zoning levy: payment for use of land
Incentive zoning: can be used to get benefits for community from developments, such as
– Offer ‘density bonus’ to developers who increase residential units on property y p p p y – Give rebate on zoning levy to developer for including low cost housing in development of property located near public transport hubs
Impact fees: similar to exactions
Exactions: similar to development levy but can be in-kind C diti d l t id bli t th t it l h ld b – Conditions on developer to provide public resources at that site or elsewhere, could be cash contribution, provision of infrastructure, land donation etc. These are conditions to getting development permit – Very popular in US: “By the mid-80’s approximately 90% of localities in the US imposed exactions compared to only ten percent prior to 1960.” (Brown-Luthango, 2006). I l i h i l ll d i l i i d i i
46
Inclusionary housing, also called inclusionary or mixed-income zoning – Increases supply low income housing and promotes economic and racial integration – Voluntary incentive-driven approach vs. compulsory, penalty based approach
Source: PDG (2004). “Final Report: Comparative Tariff Analysis.” June 2006. Report prepared by pdg Source: PDG (2004). “Final Report: Comparative Tariff Analysis.” June 2006. Report prepared by pdg for City of Johannesburg: Corporate Planning Unit. for City of Johannesburg: Corporate Planning Unit.
Residential income categories
Category 2006 income ( d t d f 2001 Characteristics of all indicative households in Joburg
Poor Middle Low Middle Middle High High W LOS I h I h I h I h I h
(updated from 2001 using CPI figures) Very poor < R969 Poor Between R969 and R1,938
Water LOS In-house In-house In-house In-house In-house Water (kl/month) 15 25 26 37 58 Sanitation LOS Waterborne Waterborne Waterborne Waterborne Waterborne Electricity LOS 60 Amp 60 Amp 60 Amp 60 Amp 60 Amp Electricity (kwh/month) 350 778 856 1 127 1 626
Medium Low Between R1,938 and R4,240 Medium Between R4,240 and R12,113 Medium High Between R12,113 d R24 227
(kwh/month) 350 778 856 1,127 1,626 Refuse LOS 2 x 85l bin liner collected once per week 240l wheeled bins collected
240l wheeled bins collected
240l wheeled bins collected
240l wheeled bins collected
Erf Size (m2) 229 263 496 998 1,386 Land (R) 10,000 12,500 26,000 55,000 117,000
and R24,227 High Greater than R24,227
( ) , , , , , Land & property (R) 12,000 48,000 125,000 234,000 376,000 Examples of suburbs Stretford Extension 4, Poortjie, Slovoville, Phiri Orlando East Malvern, Riverlea Witpoortjie Parkview
Very poor (< R969): informal settlements, backyard shacks, or inner city flats Very poor (< R969): informal settlements, backyard shacks, or inner city flats Poor (R969 Poor (R969-R1938): new RDP suburbs or established townships R1938): new RDP suburbs or established townships
47
Poor (R969 Poor (R969 R1938): new RDP suburbs or established townships R1938): new RDP suburbs or established townships Lower middle(R1938 Lower middle(R1938-
R4240): more established formal townships, formal single detached dwelling, frequently with backyard shacks frequently with backyard shacks
Source: the dplg (2007). Source: the dplg (2007). Analysis and policy advice related to setting of annual limits and ratios Analysis and policy advice related to setting of annual limits and ratios pertaining to the Municipal Property Rates Act. pertaining to the Municipal Property Rates Act. Report prepared by Dataworld, Riel Franzsen and Report prepared by Dataworld, Riel Franzsen and pdg pdg pdg. pdg.
per (R) ty R) evel ice ) r ptio er h) ion city city ptio per h) LOS Househo income p month ( Propert value (R Water Le
(LOS) Water consump n (kl pe month) Sanitatio LOS Electrici LOS Electrici consump n (kWh p month) Refuse L
Indigent
800 16 000 On-site metered 6 Metered waterborne 60A supply 50 Kerbside
Indigent
800 16,000 metered waterborne supply
Very poor
1,650 38,000 On-site metered 15 Metered waterborne 60A supply 350 Kerbside
Poor
2,500 76,000 On-site metered 25 Metered waterborne 60A supply 500 Kerbside
Lower middle
6,500 150,000 On-site metered 26 Metered waterborne 60A supply 850 Kerbside
Middle
16,000 500,000 On-site metered 37 Metered waterborne 60A supply 1130 Kerbside On-site Metered 60A b d
High
34,000 1,000,000 On site metered 58 Metered waterborne 60A supply 1500 Kerbside
Very high
50,000 1,500,000 On-site metered 60 Metered waterborne 60A supply 1500 Kerbside
48
Cent amount in the Rand on market value of immovable property (willing buyer, willing seller)
Instead of ‘residential rebate’, R15 000 residential property exclusion
S t dd t thi f t t l f R150 000
Minister can set upper limits for non-residential property rates, as ratios to the residential rate
Residential 1:1, agricultural 1:0.25, PSI 1:0.25
Section 3(3): muns should “take into account the effect of rates on the poor and include appropriate measures to alleviate the rates burden on them”
Deferral not to be applied to indigents (Section 26(3))
Cannot levy rates on land reform beneficiaries
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Overall context of urbanization, decrease in household size
Factors inhibiting poor’s access to urban land (ULM, 2007) – Legacy of apartheid and colonialism – Predominance of market-driven model Tenure security (how critical is formal title? need to look at alternative – Tenure security (how critical is formal title? need to look at alternative forms of tenure) – Performance of land and property market
downward raiding
– Lack of housing financing instruments for low income households
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Who is affected? How? To what extent?
– Poorest are exempt. Wealthier on the whole tolerate
t l bl t t b d most vulnerable to rates burden.
value
Test this via research?
– What is impact on property owners? ➔Cause eviction, downward movement in housing Cause eviction, downward movement in housing ladder? ➔Stop upward movement in housing ladder? ➔Reduce disposable income?
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p
600 700 ns 2003 300 400 500 er of transactio 2003 2004 2005 2006 2007 100 200 Numbe 2008 2009 A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K Price band
52
500 600 700 actions 200 300 400 mber of transa 100 200 A NO PRICE B R1 t R15K C R15K t R30K D R50K t R100K E R100K t R150K Num A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K Price band 2003 53
500 600 700 actions 200 300 400 mber of transa 100 200 A NO PRICE B R1 t R15K C R15K t R30K D R50K t R100K E R100K t R150K Num A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K Price band 2004 54
500 600 700 actions 200 300 400 mber of transa 100 200 A NO PRICE B R1 t R15K C R15K t R30K D R50K t R100K E R100K t R150K Num A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K Price band 2005 55
500 600 700 actions 200 300 400 mber of transa 100 200 A NO PRICE B R1 t R15K C R15K t R30K D R50K t R100K E R100K t R150K Num A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K Price band 2007 56
500 600 700 actions 200 300 400 mber of transa 100 200 A NO PRICE B R1 t R15K C R15K t R30K D R50K t R100K E R100K t R150K Num A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K Price band 2008 57
500 600 700 actions 200 300 400 mber of transa 100 200 A NO PRICE B R1 t R15K C R15K t R30K D R50K t R100K E R100K t R150K Num A: NO PRICE B: R1 to R15K C: R15K to R30K D: R50K to R100K E: R100K to R150K Price band 2009 58