Durban - Share block and timeshare “resorts” on the Durban and uMhlanga beachfronts have been hit with massive rates bills - in some cases double what they were paying - because the city has deemed them to be commercial rather than residential establishments.
The change in the rating status came about with the city implementing a revised rates policy this financial year which amended the definition of “residential property”, excluding properties which are used for “the supply of commercial accommodation”.
Now Breakers, on the uMhlanga beachfront, has launched an application in the Durban High Court, seeking an order declaring that it is still “residential” or at least a “multi-use property”.
But the city, which places a market value of about R239 million on the property, is opposing the application and says even on its own website, Breakers describes itself as a “holiday resort”.
In his affidavit which came before Judge Thoba Poyo Dlwati on Wednesday, Breakers company secretary Ian Hume said that this year’s rates bill was up 100 percent on last year.
He said the company leased the property from the city and had built 77 apartments falling under a conventional share block scheme and 80 apartments in a high-rise building under a timeshare scheme.
With regards the share block scheme, the owners had been allocated shares in the company which gave them the right of occupation to specific apartments. Many of these were primary residences although some were used as holiday homes.
With regards to the tower-block timeshare apartments, the company issued 51 shares which gave people the right to occupy them for one specific week. These can be exchanged or rented out through a rental pool.
In both schemes some shares were owned by “clubs” whose members acquired points to give them access rights.
Hume said the company charged levies for basic services and rates and made no profit out of this.
He said last year the company had been served with a notice informing it that it was being rated as “business and commercial”.
“The notice stated that the valuation of the property was the same and it did not draw attention to the fact that it had, in fact, been re-categorised.
“The company did not lodge an objection because the effect was only realised when the rates account was received,” he said.
“We deny that the new category is correct. We do not supply board and lodging. Our shareholders occupy units on a permanent or temporary basis in return for shares they have purchased.
“The apartments are a second home for the shareholders. They have exclusive use of them. And, in the (timeshare) apartments they have to share that right of use and the furnishing is provided by them.”
He said only 9 percent of the entire property was used for any commercial purpose and even if the timeshare apartments were considered “commercial accommodation”, the property should still be rated as one of “multiple use”.
In his opposing affidavit, city legal adviser Clement Xulu insists that the categorisation is correct and was done by an “impartial, qualified valuer”.
He said the building had been categorised as a hotel, but following “informal representations”, it was categorised residential.
“Eighty apartments are clearly used for holiday accommodation which is defined as commercial accommodation and some of the (shareblock) apartments are also used for holiday accommodation.
“The city acted within the law and is entitled to add new categories and drop others,” he said, noting that the company had not objected. The matter - which will be a test for properties in a similar situation - was adjourned without a fixed date and will be put on the opposed roll for argument once all the papers have been filed.
The Mercury