The South African Property Owners Association (Sapoa) told Moneyweb it is preparing court papers against a second metropolitan municipality that plans 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 sidesteps the Municipal Property Rates Act and breaches 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 president Itumeleng Mothibeli, who also serves as managing director of 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.
The association’s concern is not abstract. In 2022 the City of Cape Town introduced a similar value-linked tariff and was later ruled unconstitutional. Sapoa used that judgment to argue that any municipality adopting the same method would be breaking the law.
Beyond Cape Town, Sapoa has already cautioned the Mangaung Metropolitan Municipality in the Free State about a proposal to link waste-removal charges for non-residential customers to property values. The new legal challenge follows that precedent, although the specific metro has not been named while the paperwork is drafted.
Wider municipal context
Municipal finance and service delivery have been under intense scrutiny ahead of the 4 November local government elections. Industry leaders say deteriorating infrastructure, weak governance and poor financial management in many metros, including Johannesburg, threaten the recovery the property sector saw in 2025 after the pandemic slump.
“If you don’t have water in a neighbourhood, people can’t live, and the social fabric is affected,” Mothibeli explained, linking municipal decline to broader social risk.
The association hopes its legal action will keep it at the negotiating table with the incoming administration. “We cannot afford to be on the sidelines any more,” he said, adding that Sapoa wants to provide expertise and perspective in future policy discussions.
While Sapoa’s stance is apolitical, the body will monitor post-election developments closely, especially any changes to municipal rate-setting practices.
For more on the legal framework, see the Municipal Property Rates Act. Related coverage can be found in the Regulatory & Policy section.
At the three-day gathering in Sun City, Sapoa marked its 60th anniversary while unveiling the pending case, with president Itumeleng Mothibeli telling reporters that the association “knows it’s unconstitutional” and will “push back against municipalities that want to do that”. He added that Sapoa is ready to “show how we can do it in a legal way”, signalling a willingness to cooperate if metros adopt compliant rate-setting methods. The tone combined firm opposition with an offer of expertise, a balance that reflects the body’s dual role as advocate and potential adviser to local government.
The only other metro publicly flagged by Sapoa is the Mangaung Metropolitan Municipality, which has proposed to restructure its waste-removal tariffs for non-residential customers by tying them to property values. Sapoa warned that such a move would amount to a disguised property tax, echoing its earlier challenge to Cape Town’s similar levy. By highlighting Mangaung’s plan, the association underscores a pattern it views as a systematic attempt to circumvent the Municipal Property Rates Act and Section 74 of the Municipal Systems Act.
Internally, Sapoa’s board is slated to meet soon, with the pending legal challenge listed among the agenda items to be finalised. The board’s deliberations will determine the precise wording of the court papers and the strategy for engaging with the unnamed metro. This step follows the organisation’s practice of consolidating its position before filing, ensuring that the arguments align with the precedent set by the Cape Town judgment and the association’s broader policy objectives.
When Sapoa files its papers, the case will first be heard in the High Court, where the municipality can contest the claim and the court will assess whether the proposed rates breach the uniform-system requirement of the Municipal Property Rates Act. If the court finds the rates unlawful, it can issue an interdict preventing the metro from implementing the value-linked tariff and may order a review of the rate-setting process. Both parties will then have the opportunity to appeal any judgment, potentially extending the dispute into the Supreme Court of Appeal.
The timing of the lawsuit coincides with the run-up to the 4 November local government elections, which industry leaders view as a litmus test for political will to address municipal dysfunction. Sapoa expects that, once the new administration takes office, there will be renewed dialogue on rate-setting reforms, with the court outcome influencing how quickly metros adjust their tariffs. The association’s proactive stance aims to shape that post-election conversation, ensuring that any future changes comply with established legal frameworks.
