Did you know that there is a difference between rates and taxes charged on property and the utility you pay for water and electricity? Often these phrases are used interchangeably, and it is important for a property owner to know and understand the difference.

Rates and taxes are financial liabilities borne by the owners of immovable property which are paid on a monthly basis for basic services that are provided by the local municipality. These services include maintenance of roads, street lighting, storm drainage, sidewalks, refuse, sewerage, firefighting, etc. in other words, property rates help fund services that will improve the lives of those living in that particular community.

Property rates are based on the market value of the property as determined by a township appointed property valuer. Generally the higher the value of your property, the higher the rates you will pay.

Utilities such as water and electricity however, do not fall under property rates and are charged separately. They are based on the consumption of water and electricity, which data is collected from meter readings which should be conducted at regular intervals.

In terms of the Prescription Act read with various cases on the issue, it is trite (accepted) law in South Africa that rates and taxes charges prescribe after a period of 30 years; whereas water and electricity service charges prescribe after a period of 3 years.

In the Argent Industrial Investments v Ekurhuleni Metropolitan Municipality case, the High Court found that a consumer who receives a utility bill for electricity or water for any period older than 3 years cannot be held liable for payment of the amount once it has prescribed.

In conclusion the municipality has a duty to take reasonable steps to provide the homeowner with an accurate calculation of the utilities that it charges which are generated from meter readings that must be conducted on a regular basis– this duty exists for the benefit of both the consumer and municipality!

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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