A significant number of Cape Town property owners eligible for relief remain unaware of their status or have neglected to apply for reclassification following a change in their personal circumstances.
Image: Armand Hough
A meaningful financial gap sits quietly inside thousands of municipal accounts across the City of Cape Town.
According to Steer & Co, property categorisation - including residential, industrial, vacant land, and business and commercial - determines how the City of Cape Town levies rates.
The property management, valuation and brokerage company based in the Western Cape says there are 18 categories in total, each with its own rate in the rand.
“For 2026/27, the residential rate is proposed at 0.006428 cents in the rand. The business and commercial rate is 0.015106. More than double.
“On a property valued at R3 million, that gap is roughly R25 434 a year. That is not a rounding error.”
For straightforward residential properties, categorisation is usually clear, says Steer & Co. However, it says there are situations where the lines blur, and owners can sit in the wrong category for years without realising it.
Short-term letting is the most common example right now, it adds.
According to this company, the CoCT's draft rates policy for 2026/27 includes a specific threshold. It says that if a property's short-term letting availability exceeds 50% of total annual room nights, the Municipal Valuer may classify it as business and commercial rather than residential.
“So if you are listing a property on a short-term platform for more than half the year, you may no longer be paying residential rates. You may be paying commercial rates. And the difference, as the numbers above show, is significant.”
It is not only short-term letting, says Steer & Co. It says that mixed-use properties, properties used partly for business, and sectional title units that are rented out rather than owner-occupied all carry nuances that affect how the municipal valuer classifies them.
The company says this works the other way, too. It adds that some categories attract reduced rates, or no rates at all. “Public benefit organisations. Social housing institutions. Nature conservation land. Religious communities using property for specified purposes.”
Many owners who qualify for relief either do not know they qualify, or have not applied for a reclassification when their circumstances changed, the property management, valuation and brokerage company says.
In March, Cllr Siseko Mbandezi, City Mayco Member Finance at the City of Cape Town, told "Independent Media Property" that rates are levied for shared services and Cape Town’s rates compare well with other metros, to the point of being lower while still being able to provide high levels of services.
At the time, Mbandezi said the city publishes the categories and available support on its website and rebates for services in the budget advertising. He said they also issued various media releases encouraging all customers who require support to make use of the city’s rates rebate and indigent services offerings.
“Residents, including business owners seeking financial relief, are encouraged to approach the City for assistance.
“The city has various channels of assistance available should an organisation or household qualify. Currently, apart from the existing benefits, the city has a special debt write-off initiative for arrears debt."
The city said it has introduced special debt write-off measures as an incentive for more households to enter payment arrangements, enabling them to start making the necessary contributions from a clean slate.
Potential beneficiaries of the special debt write-off measures may include:
According to Steer & Co, this is the kind of detail that falls through the cracks when an owner is managing alone, or when the annual rates account is simply paid without scrutiny.
The company says a managing agent who understands the rates system and who reviews categorisation as part of portfolio management can advise owners on such gaps before they become costly.
It says this is not about finding a loophole. “It is about making sure the property is correctly represented, the owner is not paying more than they should, and any relief they are entitled to is actually claimed.”
The property management, valuation and brokerage says every year when the city publishes its budget and rates policy, there is an opportunity to look at one's property with fresh eyes:
These are not complicated questions, it adds. “But they are the ones that tend not to get asked until something goes wrong.”
In April, the Western Cape High Court ruled against the City of Cape Town’s fixed tariff structure. It declared fixed charges linked to property values, such as cleaning, water and sanitation, unlawful, declaring these must be removed by 30 June 2026.
“If upheld, this should bring some measure of relief to property owners, particularly as Cape Town is home to some of the continent’s most expensive property,” said Justin Thom, director at Galetti Corporate Real Estate.
In July last year, and after adoption by the City of Cape Town of the 2025/26 budget, the South African Property Owners’ Association (SAPOA) instituted legal action against the City of Cape Town to challenge the city-wide cleaning tariff, the basic water tariff, and the basic sewerage tariff, all three of which are calculated according to property value bands.
Independent Media Property