 | Huge relief on the cards for Drakenstein Municipality ratepayers
01 April 2025 | Press Releases |
1 April 2025
- On average, the value of residential properties in the Paarl-Wellington area soared by between 50% and 60% over the last five years.
- In a first for municipalities in South Africa, Drakenstein Municipality successfully engaged with CoGTA to cap property rates increases on 12.5% for residential property owners in its new financial year.
- Residential property owners with properties valued up to R350 000 will pay no property rates.
- In a new initiative, all pensioners over 60 will receive an automatic 5% reduction on property rates. Those with a proven monthly income of R35 000 or less will receive an additional rate reduction of 10% upon application and approval.
- The Municipality has budgeted to increase consumers' electricity tariffs by 10.32% in the new financial year - less than the NERSA-approved bulk electricity tariff increase of 11.32% which the Municipality will have to pay Eskom.
In a first for municipalities in South Africa, Drakenstein Municipality has successfully engaged with the national Department of Cooperative Governance and Traditional Affairs (CoGTA) to cap property rates increases for its residential property owners on 12.5% in its new financial year, starting on 1 July 2025.
This will enable Drakenstein's 42 635 residential property owners to have a maximum increase of 12.5% or less in their property rates payable year on year, irrespective of the increase in their properties' market values.
“The introduction of the capping principle is a game changer," said Dr Johan Leibbrandt, City Manager of Drakenstein Municipality, at a Council meeting held on Friday, 28 March 2025. “We will be the first municipality in South Africa to implement such a property rates module that includes the capping of property rates for a category of consumers. Drakenstein Municipality is kicking open the door for other municipalities in the country to follow suite."
The Municipality engaged CoGTA as the custodians of the Municipal Property Rates Act on capping property rates increases from one financial year to another, as the Act does not explicitly make provision for this. “We held extensive consultations with the relevant CoGTA officials, who in the end concurred that the capping of rates payable will not lead to an interference with or a distortion of the market values of properties and is therefore acceptable and implementable," Dr Leibbrandt explained.
The capping will, however, not be applied to properties whose categories changed from vacant to residential between the Municipality's 2020 and 2025 General Valuations. This part of the capping has not been approved by CoGTA as it will distort the growth in the property value and the subsequent rates payable. This will affect approximately 421 property owners.
Residential properties' value in Paarl, Wellington soar by 50% to 60%
Drakenstein Municipality has just completed its 2025 General Property Valuations with the objection period closing on 25 March 2025. “We have now given the valuer the required opportunity of 30 days, as per the Municipal Property Rates Act, No.6 of 2004, to handle the objections and provide feedback to the property owners," said the City Manager.
In the meanwhile, the Municipality is preparing to implement its new General Valuation on 1 July 2025. On average, the value or residential properties in Drakenstein (covering Paarl, Wellington, Mbekweni, Gouda, Hermon, Saron and Simondium) soared by between 50% and 60%, when compared to 2020. The average property value increases per property category are as follows:
| 1. | Residential | 60% |
| 2. | Vacant Land | 100% |
| 3. | Business Properties | 35% |
| 4. | Agriculture Properties | 65% |
| 5. | Municipal Properties | 25% |
| 6. | Public Service Purpose (All state-owned properties excluding education properties) | 7% |
| 7. | Public Benefit Organisations | 2% |
| 8. | Religious Properties | 22% |
| 9. | Historical Properties | 4% |
| 10. | Public Service Infrastructure | 11% |
| 11. | Residential (Self-Service Garage, Security Facilities and Stables) | 17% |
| 12. | Mining | 78% |
The area's public service purpose education properties, nature reserves, private open spaces, and sport and recreation properties all showed a decrease in property values.
Proposed property rates increase
While Drakenstein is experiencing a property value boom, Drakenstein Municipality has managed to keep the budget for property rates income to R538 382 891 for the 2025/26 financial year. This translates into a proposed 7.2% increase from the 2024/25 financial year. “This modest growth in the property rates income is the result of various initiatives we have undertaken to ensure that our citizens are not negatively affected by the surge in property valuations," Dr Leibbrandt assured councillors.
See below which initiatives are in the pipeline for residential, agricultural, business, and vacant land property owners, respectively.*
Proposed electricity tariff increases
The National Energy Regulator of South Africa (NERSA) earlier approved a tariff increase of 11.32% for Eskom. That means that, from 1 July 2025, Eskom can charge municipalities 11.32% more for bulk electricity. This tariff increase is further exacerbated by a restructured Eskom tariff structure which changes Eskom's current Time of Use times, which will have a further financial impact on Drakenstein Municipality.
“Even with the above changes in mind, we have budgeted to increase the electricity tariffs for our consumers by 10.32% - which is less than what we will have to pay Eskom - and the fixed basic charges increase by 4.9%," said Dr Leibbrandt.
Proposed water tariff increases
Drakenstein Municipality buys most of its bulk water from the City of Cape Town, which owns the Wemmershoek Dam from which Drakenstein Municipality draws the lion's share of water for its towns. From 1 July 2025, the City of Cape Town will be charging Drakenstein Municipality 20.6% more for bulk water purchases.
“Once again, Drakenstein Municipality is willing to absorb most of this increase for our consumers and is proposing a preliminary water tariff increase for our consumers of 7.7% from 1 July 2025. However, this tariff increase is subject to Drakenstein Municipality raising an objection to the City of Cape Town's proposal. We might have to raise or lower this proposed increase with the approval of the Municipality's final budget in May 2025," the City Manager explained. “We will also have to look at the step tariff to further discourage people from using excessive water."
Proposed refuse removal and sanitation tariff increase
The Municipality is proposing a refuse removal and sanitation charge increase of 5.9% for refuse removal and sanitation in the new financial year.
[END]
*ABOUT PROPERTY RATES INITIATIVES
For residential property owners, these initiatives include:
- The residential cent in the Rand (base rate) will be decreased by 22.5% from 0.0077490 to 0.0060055 for the 2025/2026 financial year. This reduction also translates into a 22.5% decrease in the non-residential rates (business rate and Public Service Purpose rate);
- The exemption for all residential property owners will be increased from R220 000 to R350 000. That means that if you have a property valued at up to R350 000, you will not have to pay any property rates;
- All qualifying indigent consumers will receive a rebate up to R1 000 000 on the value of their properties;
- All pensioners over the age of 60 will receive an automatic 5% reduction on property rates payable – this is a new initiative of the Municipality;
- Additionally, pensioners over the age of 60 with a proven monthly income of R35 000 or less will receive an additional rate reduction of 10% upon application and approval; and
- Residential properties where the owner cannot connect to the water, sewer or electricity networks of the Municipality will qualify for an additional rebate per service as follows:
- Water – 7.5%;
- Sewer – 7.5; and
- Electricity – 7.5%
- Note: If the owner is physically disabled an additional 7.5% rebate will apply.
For agricultural property owners, these initiatives include:
- The cent in the Rand (base rate) will be decreased by 22.5% from 0.0077490 to 0.0060055 for the 2025/26 financial year, and this rate will be applied to agricultural consumers;
- The statutory 75% rebates for all agricultural consumers will still apply; and
- The additional, up to 10%, rebates for farmworker accommodation, potable water, electrification, and provision for land for farmworker burial, education, and recreation facilities will also still apply, upon application.
As mentioned above, the agricultural property category had an increase of 65% in market value from the previous General Valuation. For this reason, Drakenstein Municipality also consulted CoGTA regarding capping for this category. The consensus from CoGTA was that capping for agricultural consumers would be allowed, but consideration to the statutory rebate of 75% and additional rebate of up to 10% must be given when the capping percentage is determined.
Therefore, a property rates capping of 50% for agricultural property owners in Drakenstein will be introduced for the 2025/26 financial year which will enable the area's 1 609 agricultural property owners to have a maximum increase of up to 50% in their property rates payable year on year, irrespective of the increase in their market values.
The capping will, however, not be applied to properties whose categories changed to agriculture between the 2020 and 2025 General Valuations. This part of the capping has not been approved by CoGTA as it will distort the growth in the property value and the subsequent rates payable. This will affect approximately 93 property owners.
For business property owners, these initiatives include:
- The cent in the Rand (base rate) will be decreased by 22.5% from 0.0131720 to 0.0102094 for the 2025/26 financial year; and
- Businesses situated outside the urban edge will receive a rebate of 30% of the rate payable.
For vacant land property owners, these initiatives include:
The cent in the Rand (base rate) will be decreased by 22.5% from 0.0077490 to 0.0060055 for the 2025/26 financial year, and this rate will be applied to vacant land property owners. No capping will apply.
Issued by: Communication and Marketing, Drakenstein Municipality
