Secretary Cape Town Collective Ratepayers' Association •3 months ago CAPE TOWN COLLECTIVE RATEPAYERS’ ASSOCIATION (CTCRA) 30 April 2026Comments on the City of Cape Town’s draft 2026/27 budget The City of Cape Town’s (the City) draft 2026/27 budget, published hot on the heels of the new 2025 property valuations, states that “Around 60% of homes will see a property rates decrease or no change, thanks to special measures like a lower rates formula and an increased rates-free threshold.” While it is correct that the 10.2% reduction in the Rate-in-the-Rand will bring some relief, the picture that the city presents is misleading. If one adds the effect on the other charges (water, sanitation, city-wide cleaning) then a very different conclusion must be drawn. The valuation increases and draft tariffs are (again) presenting ratepayers with increases well above inflation and are eroding the disposable income of residents to the point that some will be forced out of their homes.At the outset, we state that it is now very difficult to comment on the City’s draft 2026/27 budget given the outcome of the case brought by the South African Property Owners’ Association in respect of the three fixed charges for water, sewerage and city-wide cleaning. The Western Cape High Court today handed down judgment which affirmed that these charges are invalid and unlawful. However, they form part of the City’s draft budget and there is as yet no indication of what the City’s response will be to the judgment in relation to this budget. The CTCRA therefore requests that an extended period be provided for public comment, to allow the public to become aware of the judgment and to enable the City to provide an indication of how the judgment will impact the budget. Average freehold valuation increases are 26% across Cape Town, and 440,000 (69%) freehold properties have seen valuation increases higher than 11.3%, which is where the rates will increase despite the Rate-in-the-Rand decrease. The vast majority of homeowners in high-growth areas will see their monthly rates bills rise significantly, rendering the City's "relief" claim moot for those residents. CTCRA has created an online calculation tool (https://ctcra.org/calculator.html) that shows the effects of the valuations and budgets over three budget years. Despite the City’s claims in social media posts that this calculator is producing inaccurate results, it is in fact producing identical results to the City’s “official” calculator. There is nothing preventing interested and affected parties from developing their own calculators to model the impacts of the budget on different categories of household. To grasp these effects CTCRA created 4 scenarios (see infographic below) of varying property valuations, valuation increases and utility consumption patterns. In all these scenarios the municipal bills will increase substantially more than the inflation rate (CPI Feb 2026: 3.0%). When one recalls the steep increases that the City introduced a year ago the picture that appears is far worse: with this budget municipal bills will increase by multiples of the inflation rate over 2 years. Furthermore, the budget is showing additional increases in ratepayer contributions to the budget of 9-10% for the two budget years beyond 2026/27. Since the number of ratepaying households is only expected to increase by 1-2% on average per year this means that the increase in real terms for all ratepayers is going to be 6-7% in 2027/28 and 2028/29. Add to this that:
one third of the properties do not pay rates or fixed charges; and
the properties between R1m and R4m are generally sheltered against onerous increases;
this means that properties above R4m will face annual increases exceeding 10% for the foreseeable future.
The reason why residential municipal bills are increasing at this alarming rate is rooted in a number of factors, outlined below, with proposals by CTCRA on ways to mitigate their effects (please refer to the separate budget analysis document that is provided together with this statement):
The proportion of the budget that is funded through ratepayer revenue is increasing from 68% in the current year to 72% in 2028/29, while the total operating budget itself is also increasing by 20% in the same time. The number of properties expected to pay rates will only increase by 5%, which means that the burden on ratepayers is going to increase substantially (again) over the next 3 years.
The average annual increase in municipal bill per household in the coming 3 years is 6-7%. Unfortunately, due to the structure at which tariffs are calculated and City’s policies, this will mean that properties valued above R4m will be facing much higher increases than these averages.
The largest expense for the City is bulk electricity purchase and the City is rightly reducing its dependence on Eskom. CTCRA believes that this could be accelerated by increasing the stimulus for homeowners with excess solar power:
While the introduction of the optional Time of Use tariff for electricity (allowing owners to optimise their electricity costs) is a good sign it is unclear when this will be available for feed in. CTCRA also believes that the cost of the AMI meter should be reduced (for instance by using split phase bi-directional meters that can be installed in existing meter housing, as is the case with pre-paid meters) to make it more attractive for owners to export their excess electricity to the grid and thereby recover some of the rates bill increases.
The insecurity of the longevity feed-in tariff adds to the hesitance for homeowners to invest in these meters. The City should announce its long term intention regarding the feed-in incentive of R0.25 / kWh, since payback for the required AMI meter is currently longer than 3 years.
The second highest cost driver is elevated inflexible staff costs. The following is proposed:
Establish an initiative within the Core Application Refresh (CAR) programme that investigates the use of artificial intelligence technology in order to automate administrative processes and improve customer satisfaction. Part of this initiative could be to develop business cases for automation in combination with voluntary retrenchment schemes.
Staff costs can be contained by challenging nationally binding collective bargaining agreements. It cannot be justified that municipal staff costs are determined by collective bargaining agreements, while the majority of the ratepayers are not assured of similar increases. This challenge could start by performing research into the salary increases received by its ratepayers and use this to formulate amendments to labour legislation that does not allow for collective bargaining agreements to undermine the sustainability of municipalities. These amendments could be submitted in a private bill in parliament.
Fixed charges for water, sanitation and city-wide cleaning:
The City has chosen since last year to link fixed charges for water and sanitation to property values and introduced a new “city-wide cleaning” charge, also linked to property values. Due to the valuation increases the effect of the draft budget is exacerbated, especially for properties valued above R3m (which fund ±60% of the ratepayer contributions). CTCRA has objected to this link on many occasions for precisely this reason and joined the high court case against these charges as amicus curiae. As mentioned above, judgment in this case was handed down today affirming the CTCRA’s position, aligned with that of SAPOA and Afriforum, that these charges are unlawful and invalid. The CTCRA’s view is that the City should revert to a fixed charge for water and sanitation linked to the connection size and should fund the cleaning activities through the regular rates, where they do not incur VAT.
Properties that treat their own sewage should get rebates on the fixed sewage fee, since the load on the city’s sewage treatment is reduced. This can reduce the costs of maintaining the sanitation infrastructure.
Pensioner rebates are available but unfairly applied. When pensioner households apply for relief, they must also declare all their investments, rainy day savings accounts, policies, etc. This disqualifies many prudent and responsible pensioner households that survive on much less than R27,000 per month. This could be addressed through the following means:
Base the pensioner rebate on consumed pension income and exclude interest on investments used for cumulative interest and not consumption.
Determine Valuations of Life right owners on the value of their life right and not on a fictitious valuation that they will never be able to cash in due to the nature of their contract with the developer.
Homeowners who live in areas with CIDs are hit exceptionally hard, since they pay an additional levy. Areas with CIDs should be given the option to perform their own cleaning of public land and owners in those areas should then be exempted from the city wide cleaning tariff. CIDs are able to provide services at a lower cost level, because they are not required to comply with national frameworks and procurement policies.
The City should investigate these additional income streams:
The contribution from National Government to the municipal budget is expected to remain more or less constant, while the budget is increasing by 20% over 3 years and Cape Town’s population continues to increase (according to the City by 1-2% a year). CTCRA believes the City should fight to get its rightful share and thereby relieve the burden on ratepayers.
The City has not investigated/implemented any of the CTCRA previous suggestions to generate additional income to reduce the pressure on ratepayers, such as an overnight tourist tax which has been successfully implemented in many countries and cities around the world.
The City is woefully inept at enforcing by-laws and should restructure law enforcement to apply by-laws more stringently by including building inspectors in safety and security, collecting fines for traffic violations, and increasing fines for illegal land-use and development.
Accelerated infrastructure spending:
The City is continuing to invest heavily in infrastructure. While CTCRA agrees with the need for this, we urge the City to either spread these capital intensive projects over a longer period or to make sure that the city receives its fair portion of national funding for it.
Enormous increases in valuations are causing panic among homeowners. Section 74 of the Municipal Systems Act states that tariffs must be affordable and equitable. It is clear that the budgeted increases of 9-10% for each of the coming years, combined with valuation increases far exceeding the average (17%) are unsustainable. The CIty should consider mechanisms to cushion homeowners from the effects of valuation increases above the average (17%). This has also been done in other cities across the world:
Phase-in provisions - spreading a large valuation-driven increase over 3–5 years
Percentage caps - limiting annual rates bill increases to CPI + X% regardless of valuation movement
Circuit breaker mechanisms - capping rates as a percentage of household income
Furthermore, Life right owners are being hit especially hard, since the value of their life right does not increase over time. Their property valuations should therefore not be based on a fictitious valuation that they will never be able to cash in due to the nature of their contract with the developer, but on the actual value of their life right.
