The difference between categories of rate-able property and zoning

26 November 2021,  Perino Pama 51
The difference between zoning and different categories of rate-able property imposed by the Municipality for rating purposes based on the way in which the property is used: 

Many people confuse the difference between zoning and different categories of rate-able property imposed by the Municipality for rating purposes based on the way in which the property is used.

A property zoning is a list of rights that dictate what uses the property can legally be put to.  A property zoning is determined by the applicable town planning scheme and the best way to find out what zoning you have for your property is to secure a zoning certificate from your Municipality.  

However, the Municipality may in Terms of Section 8 of the Local Government Municipal Property Rates Act No. 6 of 2004 determine categories of rate-able property within their jurisdiction to determine how rates should be calculated.  

Municipalities must for example, describe properties as residential, industrial, business/commercial, agricultural, mining, properties owned by an organ of state and used for public services, public service infrastructure properties, properties used for public benefit organisations and use for public benefit activities, properties used for multiple purposes.  The latter category is interesting because you may, for example, own a farm but on the farm, you have guest house activity and in addition to that you have a farm store.  So, the Municipality may determine different rates on your property depending on how you use the property. Even though your farm is zoned as an agricultural property they may still charge rates on a commercial basis for those portions used for commercial activity because you are using parts of your farm for commercial reasons.

Strangely enough, if your property is used for an unlawful purpose (e.g., a guest house on a farm) the Municipality may charge you rates for that unlawful use, but it does not make the use legal from a zoning point of view (in other words, do not assume that just because you are paying rates on a guest house it means that the operation of the guest house is lawful).

Many rural properties are often rated by Municipalities as residential properties because they are not in fact used as agricultural properties but as “lifestyle” properties.  The practice tends to be to ask for registration with SARS as proof that you are earning income from the property as an agricultural property.

Regarding zoning, one should refer to the Spatial Plan and Land Use Management Act, 16 of 2013 together with what is known as the SPLUMA Regulations.  At local Government level one usually has a By-Law dealing with Municipal Land Use Planning which is an important source document.

Unfortunately, we have seen that some purchasers of property rely on the rating categories imposed by the Municipality to form the conclusion that their property is zoned for a particular use which is not applicable to that property.  Great care should be taken to find out what the true zoning is of the property and what the different rate-able categories are. 

In addition, you should find out what the Municipal valuation is of your property.  If you are dissatisfied, you may lodge an objection when the time is right to do so and prove the correct market value of the property.  The Municipality will advertise the Valuation roll and give you an opportunity to comment. It is always a good idea to appoint an estate agent or a valuer to assist you to value your property correctly as this will make sure that the rates that you pay are correct and in accordance with the value and the use of the property.