The South African Property Owners Association (Sapoa) told Moneyweb it is preparing a second legal challenge against a metropolitan municipality that wants to set rates and taxes based on the value of commercial and industrial properties.
Sapoa says the approach is an unlawful, disguised property tax that bypasses the Municipal Property Rates Act and violates Section 74 of the Municipal Systems Act, which together require rates to be based on a uniform system rather than on market-value assessments.
Why this matters to commercial property owners
For owners of office blocks, warehouses and retail parks, a levy that rises with property values can increase the cost base faster than rental income. Sapoa’s outgoing president Itumeleng Mothibeli, who is also the South African managing director of JSE-listed Vukile Property Fund, warned that such cost pressure makes property a less competitive asset class.
“If our cost base is increasing not at the same level as the top line then we become uncompetitive,” Mothibeli said at Sapoa’s annual convention in Sun City.
Sapoa already won one round on this point: the City of Cape Town’s fixed charges for city-wide cleaning, water and sewerage, introduced in its 2025/26 budget and linked to property value rather than consumption, were later found unlawful, and the city repealed them. “We know it’s unconstitutional. In the judgment of the City of Cape Town it was proven to be unconstitutional and we will be pushing back against municipalities that want to do that,” Mothibeli told Moneyweb on the sidelines of the convention, where Sapoa also marked its 60th anniversary.
He added that Sapoa is willing to work with municipalities that want to get it right: “But we’re also extending our hand to say we understand the pressures, we can show you how we can do it in a legal way.”
Apart from Cape Town, the only other metro Sapoa has named is the Mangaung Metropolitan Municipality in the Free State, which it has cautioned over plans to link waste-removal charges for non-residential customers to property values. The metro now facing the new legal challenge has not been named while the papers are drafted.
Wider municipal context
Municipal finance and service delivery have been under intense scrutiny ahead of the 4 November local government elections. Mothibeli linked municipal decline to broader social risk: “If you don’t have water in a neighbourhood, people can’t live, if they can’t live then the social fabric is affected and if that is affected then you’ve got a big crisis in that community.”
For more on the legal framework, see the Municipal Property Rates Act. Related coverage can be found in the Regulatory & Policy section.
