City of Cape Town concerned about low tenant response to R4bn debt write-off incentives
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Cape Town – The City of Cape Town is concerned that its tenants have not responded as expected to debt remission incentives. It has been offering a debt write-off incentive of about R4.1 billion to qualifying debtors.
This is intended to improve the culture of payment as well as assisting struggling debtors who have historic debt older than three years, the City said in a statement today. The debt write-off incentive action was taken due to the continued impact of Covid-19 and the much slower than expected economic recovery over the past year.
This comes with the condition that the debt will be placed back onto the accounts if customers default on their arrangement.
About 46 900 payment arrangement applications have been processed since the implementation of the debt remission process. Of this, about 25 200 applications have qualified for the historic debt write-off.
To date, about R1.9 billion in debt has been written off to assist the City’s customers and there is still R1.8 billion in debt that is older than three years, which could potentially be written off when customers enter into payment arrangements,’’ the City said.
This comes with the condition that the debt will be placed back onto the accounts if customers default on their arrangement. Residents and City tenants have been encouraged to contact the City to find out if they qualify for a write-off.
’’The City’s latest payment ratio is approximately 98%, which shows that the majority of residents and businesses are paying their municipal accounts and we thank them sincerely for this.
’’However, assistance in the form of interest free payment arrangements is available to those residents and businesses that have been severely impacted by Covid-19 and the national lockdown.
’’We are pleased with the R1.9 billion uptake on the special historic debt write-off but we have R1.8 billion still available to assist residents with historic debt, to act as an incentive to improve the culture of payment, and keep the municipality strong and healthy to continue with the provision of services.
’’This is in addition to our R3.4 billion indigent relief that is available for registered indigent households. Our message is: there is help on offer, and residents and businesses should approach the City to see what we are able to offer. Customers are urged to contact the City so that their case can be evaluated,’’ said the City’s Mayoral Committee Member for Finance, Ian Neilson.
The City’s Mayoral Committee Member for Human Settlements, Malusi Booi, said: ’’We’ve noticed that City tenants have not responded as expected to the debt remission incentives. The low uptake among City tenants is of concern.
’’The City has more than 57 000 affordable housing rental units, and many tenants could possibly qualify for a write-off, but to date, approximately only 86 have taken advantage of this incentive.
’’The maintenance and upgrading of the City’s rental stock is partly funded from rental income, and tenants need to pay their rent to ensure the City can continue to do so. Over the past two years, the City spent more than R1 billion on the maintenance of these affordable rental units.
’’The City does its best to maintain its rental stock; however, the Public Housing Department has not been generating the expected revenue for maintenance and upgrades as a result of poor payment of rent by tenants over the years. The City is dependent on this income.
’’We have thus been limited in meeting the demand for upgrades to our rental stock. If our collection rate increases, we could do so much more maintenance and upgrades. There are many tenants who have the means to pay but are not doing so.
’’For those who are unable to pay, we make a plan if we are approached for assistance.’’