A court case that most South Africans probably scrolled past this month deserves a lot more attention than it got. On 30 April 2026, the Western Cape High Court ruled that Cape Town’s fixed charges for citywide cleaning, water and sanitation were unlawful and unconstitutional.
The South African Property Owners Association (Sapoa) brought the case and won. The city has since decided not to appeal, which tells you everything you need to know about the strength of its legal position.
The issue was that Cape Town had structured the fixed service charges so that the amount you paid was calculated based on your property’s value. The more expensive your property, the more you paid for cleaning and basic water, regardless of how much water you used or how much rubbish you generated.
The court found that linking a service charge to property value converts it into a property tax in disguise. Municipalities don’t have the legal authority to introduce new property taxes. That power sits with the national government. What looked like a service charge was, legally speaking, an unlawful levy.
The city is scrambling to rework a budget that depended on roughly R2 billion in revenue from those charges. A new draft budget goes out for public comment on 27 May 2026. Sapoa has said citywide cleaning should be funded through property rates, the mechanism that exists for broad-based municipal expenditure. The city appears to agree.
Why does this matter beyond the Western Cape? The ruling is a mirror being held up to every municipality in the country. Municipalities have a problem and it is one that few are willing to talk about honestly. They are over-reliant on a small group of people to fund their budgets — property owners. Property taxes and rates make up a disproportionate share of municipal income in most of our major cities.
When you add surcharges and service fees that get stacked on top of rate bills, a significant portion of what municipalities collect comes from the same pool of ratepayers. That is not a sustainable funding model and it creates a political temptation that is almost impossible to resist. To put it another way, if you need more money, you look at property owners because they’re paying, their properties are registered and they’re relatively easy to bill.
Cape Town’s value-linked charges were a version of that temptation. Instead of going through the proper legislative process to increase rates, which requires alignment with the national framework and public consultation, the city found a creative workaround.
Link the service charge to property value, collect more from higher-value properties and achieve the revenue outcome without technically calling it a rate increase. The court said no.
Here is what the data tells us about the broader problem. According to research compiled from the National Treasury’s local government data, property rates as a share of municipal operating revenue have climbed steadily over the past decade. In the metros, rates income has in many cases grown faster than inflation — and significantly faster than the property values being taxed.
The City of Cape Town’s budget shows rates income growing at compound rates that have consistently outpaced CPI. The same pattern holds in Johannesburg, Tshwane and eThekwini, where property rate increases have run between 8% and 12% annually, even during periods when inflation was at 4% or 5%.
For property owners, this is not an abstract policy conversation. It lands on your doorstep in the form of a municipal account that seems to grow faster than almost anything else in your cost of living.
Being a property owner in South Africa in 2025 is sometimes not as glamorous as it looks. The romanticised version of buying a property, building wealth, collecting rent and retiring comfortably has become something different. The costs of owning, maintaining and managing property have escalated dramatically while the income from that property has often not kept pace.
Think about what goes into owning a property. You start with transfer duty on acquisition, which applies at a graduated rate to purchases above R1.1 million, plus conveyancing fees, bond registration costs and potentially an estate agent commission.
That’s before you’ve switched on a light. Then come the monthly costs of the bond, levies if you’re in a complex, property rates, building insurance, maintenance and repairs.
If you’re a landlord, add vacancy periods, property management fees if you use an agent, the cost of tenant disputes and the risk of a non-paying tenant you cannot remove quickly because the Rental Housing Tribunal moves at its own pace. As for the effectiveness of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998, let me save the rant for another article.
Rates alone have become a material line item. A property valued at R3m in Cape Town can attract a monthly rates bill of R2 500 to R3 500 or more, depending on the category and the valuation cycle. The number was lower five years ago.
In Johannesburg, where property values in many areas have gone flat or backwards in real terms, rates bills have kept climbing. You are paying more for a municipal service in a city where the roads are worse, the water infrastructure is under pressure and load shedding, while recently improved, has cost property owners significantly in generator investments and electricity surcharges.
The cumulative effect on affordability is real and underestimated. When first-time buyers do the maths on whether they can afford a property, they typically look at the bond repayment and maybe the levy. Rates often get underestimated. The cost of maintenance, which, for an average freestanding house, is roughly 1% of the property value a year almost never features in the calculation.
The true cost of owning property is considerably higher than the headline price suggests. Municipalities raising their rates above inflation year after year are making that calculation worse.
None of this is an argument against municipalities collecting revenue. They need it. Roads, water reticulation, waste removal and electricity infrastructure cost money and property owners benefit from them.
A well-run city with reliable services and maintained infrastructure is the most important driver of property value. I have made this argument in this column before: the reason Cape Town properties appreciate the way they do is not just the mountain and the ocean. It is the fact that the city’s lights stay on, the sewage system mostly works and the streets get cleaned. That is worth paying for.
But paying for it and being exploited are two different things. When a municipality creates a charge that is linked to the value of your asset and not to your usage, not to the cost of the service but to how much your property is worth, it has crossed from taxation into something that looks more like a wealth levy applied to an illiquid asset.
You cannot sell 10% of your house to pay your rates and you cannot easily liquidate equity. You are being asked to fund the municipality based on a notional value, while the municipality often fails to justify how the number translates into service delivery.
Sapoa is engaging Mangaung Metropolitan Municipality on the same issue. Other municipalities had better take note because the precedent is set.
The lesson is not complicated. Property rates and proper service levies are legitimate. They are the clean, constitutionally sound way to fund shared municipal services. Sapoa has said it supports the mechanism.
What is not legitimate is using property values as a proxy for ability to pay, packaging it as a service charge to avoid legislative scrutiny and then running a R2bn hole in your budget when a court calls it out.
Municipalities need to do the hard work of broadening their revenue bases rather than returning to the same well. They need to improve billing and collection rates and be transparent to ratepayers about how their money is being spent.
Property owners are carrying more than their fair share of an increasingly heavy load. They are not an inexhaustible revenue source. As this court case has reminded us all, they are not without legal recourse either.
A court case that most South Africans probably scrolled past this month deserves a lot more attention than it got. On 30 April 2026, the Western Cape High Court ruled that Cape Town’s fixed charges for citywide cleaning, water and sanitation were unlawful and unconstitutional. The South African Property Owners Association (Sapoa) brought the case
