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Durban is more expensive to live in than Joburg or Cape Town. This is according to a recent research study conducted by development economists Urban Econ on behalf of the South African Property Owners Association (Sapoa) with Trade and Investment KwaZulu-Natal.
Among the reasons are the eThekwini municipality’s introduction of a “development surcharge” coupled with having one of the highest rate randages in SA, and high water and electricity tariffs.
The research covered the three biggest cities as well as KwaDukuza, Msunduzi (Pietermaritzburg) and uMhlathuze (Richards Bay).
It was based on existing tariffs applicable to new residential, retail, office and industrial property developments, from zoning and subdivisional fees to building plan fees, connection charges, consumption charges and rates.
The study said eThekwini was on average 30 percent more expensive than the other cities once a property had been developed.
“EThekwini has overwhelmingly the highest rate randages which, when applied to equally valued properties across the various cities, results in the highest annual rates being paid. The vacant land rate randage is particularly high in comparison,” it said.
“The major difference in eThekwini is the existence of a ‘development surcharge’ for residential and commercial developments, which increases the upfront costs substantially in Durban. However, Sapoa is legally challenging this surcharge as it is deemed to be unlawful,” it added.
According to the study, removing the development surcharge and vacant land rates would make Durban more competitive and Cape Town would be the most expensive overall.
Sapoa CEO Neil Gopal has said the development surcharge was “illegal” and was having a devastating impact on property development in Durban.
The surcharge was implemented in the city’s 2010/11 budget for multi-unit residential and commercial developments and is described as a ‘surcharge for infrastructure’. Sapoa said that according to eThekwini’s 2011/12 budget, the surcharge would now be implemented at R16 500 per 100m2 of gross lettable commercial area developed and R14 227 per unit on multi-unit developments.
Lilian Develing, of the Combined Ratepayers Association, said the study proved what ratepayers had been complaining about for years.
“People are moving out of Durban. In the past six weeks alone two families from the Waterfall area have left. The belief that Durban is a cheaper city to live in is no longer true.”
Pressure
Develing said ratepayers were being squeezed because there was a small rates base.
“Instead of trying to grow the rates base, the municipality prefers to put more pressure on the current ratepayers and people can no longer support themselves.”
Durban Chamber of Commerce and Industry CEO Andrew Layman said the municipality had unilaterally instituted the development surcharge on property developers without consulting the local business sector.
“This surcharge seems to be a temporary measure by the city until its plans for ‘development charges’ are introduced. Those plans, which have caused an outcry from all quarters, will not only affect developers but ordinary homeowners and businesses,” he said.
“These charges will increase property development costs significantly and thwart property projects in Durban… Chamber members who are active in the property sector are already up in arms about the surcharges and we are opposed to the plan to extend this in the form of development charges,” he added.
Layman had not seen the Sapoa study, but said it was clear property development in Durban was costing more.
“This does not mean the overall cost of doing business in Durban is higher… It means property development costs are higher and this will have a ripple effect on business and ordinary homeowners. There’s a real risk of investment not coming into Durban, but going elsewhere into areas such as Ballito,” he said.
Layman said the city should work with the property industry to find a “more workable solution”.
Referring to the study, property developer Gary Liebenberg, director at Lorber Projects, said high-end prospective home buyers were looking for property outside the municipality because of the high rate randage.
“People would rather move out of suburbs like Berea and Durban North to the housing estates like Zimbali and Simbithi housing estates where they would pay almost half the rates for a property of the same value,” he said.
“Essentially, what the municipality is doing is telling developers to take their skills and go elsewhere.”
Economist Bonke Dumisa said the municipality was frustrating ratepayers and businesses.
“The municipality should stop looking at trying to create more avenues to get revenue. They should rather focus on accessing revenue from several entities that should be paying for services but are not.”
Another developer, Greg Cryer, partner at Key Developments, said the development charge for multi-unit developments was ridiculous.
“I have scrapped three to four projects because of this charge which is about R1.4 million for 100 houses that a developer has to pay up front… They should be thinking about the 100 families who would live in those homes and pay rates. In comparison to those families’ rates, their development charge is inconsequential.”
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Sheena Pillay, wrote
@Kevin. Hey kevin hope the move to Balitto works out. would like to see what you guys do, when you have no proper water supply for the next 3 years, thereafter you rates would go up to pay for the additioanl loans Ilembe has take out to upgarde their bulk water supply to Balito. At the moment Balito has continous electricity outages. So Kevin stock up on the candles and water purification tablets...
paul, wrote
herewith
Frazier, wrote
Sutcliffe was an arrogant city manager, pretending he was just carrying out orders. What a laugh he looks with his funny commy shirts. He is so insincere. He messed up big time, I think he was the most disliked man in Durban. What a pleasure it will be now that he has gone. Dont let him influence you, Sibusiso Sithole, Sutcliffe is a mean man with a chip on his shoulder.
Kevin Smith, wrote
We have just made the decision to move out of Durban to Ballito. The extra money we will have from savings in rates justify the traveling costs as well as an extra R500 000 on a 20 year bond available to be spent on the new house.Coupled with decent services in Ballito, compared with our absolutely useless Durban services it has become a no brainer. We know of 3 other families doing the same. Kris Kumar and his mates are quietly destroying our city.
z1r, wrote
And the basic necessities are also more expensive in Durban. But salaries are op to 30% lower than in Jhb or CT. And that to reside in a city that now experiences bad weather on average 6 days out of 7. I laugh when I see the roadside banners advertising Durban as the Sunniest place in SA!!! It will all crash down further when the tourists catch a wakeup.
DD, wrote
I pay almost R10000.00 in taxes per month and would like to understand what I get for it? I pay for water and electricity, refuse removal, pay for the roads through the fuel levy and the soon to be introduced tolls on the highway, I pay to renew my licence and so on........none of these services are offered for free, and the one free service i would not dream of using - that is the government hospitals, we pay for private security companies to protect us....and the list goes on. So forgive me if I turn my head when you come up to my window at the robot - go and ask the government you voted in , where on earth our taxes have gone.
Nadine, wrote
@Sheena - CT has more rugged terrain in one suburb, than the whole of KZN.
chris, wrote
@Themba - it is people like you who are too stupid to understand that the city benefits from tourism that the city is actually falling apart. Help clean the city up, take the corruption out and build a nice place for the future of our children and leaders. Those officials earning top salaries muszt prove themselves of replace them by someone who deliver on the promises
Anonymous, wrote
@Sheena Pillay So does that mean if I build a new house in a "rugged" area and have septic tank I do not have to pay these extra fees? That is a pathetic attempt at justifying the corruption! Durban is getting ridiculously expensive and all that will happen is the under-paid hard workers will move to Cape Town and Joburg, then who will pay the rates?
Anonymous, wrote
the salaries are lower and the rates and water and electricity is higher ..... i emailed mike sutcliffe approx 5 months ago asking him why are rates are so much higher than CT. I had just been to CT on holiday and stayed in Camps Bay i walked pas the Pam Golding agency and looked at properties pics outside and they stated the property prices and the rates and i would say their rates according to the valuations are around 50 % lower than ours . I asked the estate agency how come their rates were much lower than Durbans and she said they people of CT rallied together and their municipality listen to the people . By the way i emailed Mike sutcliffe twice and had no reply . We are paying for the masses who dont pay anything
Frank Hartry, wrote
There is something wrong with a municipality that would dishonour WW2 Durban hero Edwin Swales VC who deliberately sacrificed his own life to save the lives of his seven man crew, by cancelling a thoroughfare named after him, but at the same time honouring a street after Che Guevara who executed hundreds of innocent so called collaboraters in Cuba after the revolution in 1960. Swales grew up and went to school in Durban whereas Guevara had never even been to South Africa or participated in so called struggle. Dishonouring Swales VC was a spiteful jealous act by Sutcliffe and his ANC council.
marius , wrote
tyd om vir 'n huis in calitzdorp te kyk. kan net erger word in die k nes.
Sheena Pillay, wrote
Agreed that developers cost are high in Ethekwini, however one has to consider the rugged terian that we have to deal with in Durban. The cities of Capet Town and Joburg do not have this to deal with. So the earthworks and so forth in durban are much much higher. I do work for a construction company that does work in all the metro's our biggest stumbling block is the prices of earthworks in KZN.
Slimey, wrote
Strange how the whole "Point Developement" does NOT PAY RATES and TAXES... all because Mike Suttcliff lives there!
Themba, wrote
@aPAULing - stay in Europe, we don't need you!
the one, wrote
bugger whatthe municipality says. their intent is to fleece homeowners and throw money at problems instead of finding workable solutions
Who knows, wrote
Daft research! The researcher doesn't even know how to handle the facts directly proportionaly.
aPAULing, wrote
I left SA 3& half years ago, because I could see the country was falling apart. Every time I read AOL, I realise this was the best decision I could have made. The story of Robin Hood, was about a man standing up against King Richard, because he was taxing the poor and they were getting poorer and poorer. I can't believe how quickly SA is deteriorating in the short time I have been away. I used to love going to Natal for a holiday. If this constant cost rise continues, the whole city will continue to deteriorate and stop me from coming over from Europe for a holiday. SHAME ON YOU!
eish, wrote
maladministrtaton, corruption, then they squeeze the cashcows ... again. it's the modus operandi of the ANC.
shaun, wrote
Get rid of the nigerian drug dealers and dirtbin will be a better place. The amount of money they earn is ridiculous. Get rid of the prostitutes, get rid of the hobos and dirtbin will start improving. Seriously, you cant even go down to the beach without somebody trying to knock you down for something.
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