Property Rates Amendment Bill may be unconstitutional

AfriForum is currently investigating the constitutionality of the Municipal Property Rates Amendment Bill (see here - PDF).

According to Cornelius Jansen van Rensburg, AfriForum's Head of Community Affairs, it appears that the redefinition of residential rental property as commercial property will amount to a form of income tax, which will be a violation of section 229 of the Constitution.

To date, property tax has been based on a property's status in terms of municipal zoning. "If the amendments are approved, the focus will shift to whether or not income is generated from a property," Jansen van Rensburg said.

Section 25(5) of the Constitution requires the state to create an environment in which property is accessible to all inhabitants of the country. Given the economic impact of the proposed amendments, only the super rich and the state will be able to enter the property market due to higher administrative costs of property ownership. The middle class will consequently be excluded from property ownership.

Section 26(1) of the Constitution enshrines the right of access to housing. Rental properties will become unaffordable for people who do not qualify for mortgages, thereby increasing people's reliance on the state for housing.

Jansen van Rensburg said that the proposals appear to come down to another form of nationalisation through taxation. The proposed amendments are likely to drastically limit property ownership among the middle class.

Statement issued by Cornelius Jansen van Rensburg, Head of Community Affairs, AfriForum, July 18 2011

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