Latest MPRA compliance requirements
The Local Government: Municipal Property Rates Act, 6 of 2004 (hereafter MPRA) regulates the power of a municipality to impose rates on property, these are known as property rates. Municipal rates policies make provision for fair and equitable rating and extend rates relief to vulnerable households within the municipalities. The MPRA provides for differential rating, that is different categories of property are rated differently.
In 2015 the MPRA was amended. 1 July 2021 is the effective date for the shift to the prescribed categories of property, section 8. Section 93B of the MPRA Amendments provided for seven years for municipalities to transfer from discretionary categories of property to categories of property within the prescribed schedule.
1. Prescribed Categories of Properties, section 8
From 1st July 2021 the MPRA prescribes 9 categories of property:
Watch out for the following categories of property: Communal land; State owned properties; Educational properties. These previously used discretionary categories are not included within the prescribed categories of property. These properties must be re-allocated to a prescribed category of property ahead of the effective compliance date, 1st July 2021.
Municipalities are required to separate industrial and commercial categories of property. Neither commercial/business nor industrial properties are defined within the MPRA. Municipal rates policies should include the definitions for these categories of property. Municipal rates policies must be reviewed annually, section 5(1) and adopted with the annual municipal budget. Rates by-laws must be adopted to support the rates policies.
Impermissible differentiation
The rates equation or amount of property rates levied per property is calculated by multiplying the market value of the property as determined by the municipal valuer by the respective tariff allocated for that specific category of property. The differential tariffs are determined annually by the municipality in their budgetary process. A municipality may not apply differential tariffs within any category of property. There is provision for subcategories. Subcategories need to be applied for from the National Minister 15 months prior to the effective date section 4(b)(iii).
Additional categories of property
A municipality may determine additional categories of property provided these do not circumvent the prescribed categories, section 8. Examples of additional categories of property are as follows: Municipal owned property, places of public worship, formally protected areas and national monuments and section 17, impermissible categories of property (properties where the levying of rates is disallowed). Un-authorised use is also a commonly used additional category of property supported by various case law.
2. Rates Relief
Municipalities have discretion through their rates policies, subject to annual review, to extend discretionary rates relief through exemptions, rebates, and reductions to both categories of property and categories of owners of property. The criteria for rates relief and the application mechanisms are defined within the rates policies of each municipality.
Below is a closed list of categories of owners that may be extended discretionary rates relief through the municipal rates policy:
Frequently asked question:
How does a municipality address extending rates relief to categories of property that are excluded from the closed list, section 15(2), above?
The municipality may create an additional category provided that, this does not circumvent the prescribed categories, section 8(3). The provisions are that a separate tariff must be determined for the additional categories. No relief may be extended to these categories of property.
Examples of additional categories of property include:
- Animal shelters
- Voluntary associations, that are not registered Public Benefit Organisations
- Cemeteries
3. New MPRA Circulars
Following a compliance evaluation from a sample of municipalities the Department of Cooperative Governance and Traditional Affairs (DCoG) issued 3 new MPRA circulars to provide clarification around non-compliance for certain aspects of implementation and reporting.
Circular 11, Feb 2021, replaces Circular 6, April 2014
Circular 12, Feb 2021, replaces Circular 6, April 2014
Circular 13, Feb 2021, replaces Circular 3, April 2014
Closing comments
MetGovis, as the industry leader, is available to assist municipalities and interested stakeholders with further information regarding the items discussed above or any other MPRA related issues.
The full MPRA legislative framework including all the regulations and circulars is published on our website.
Please contact us on 033 3432868 or www.metgovis.co.za
Janet Channing
MD, MetGovis
May 2021
