The City of Cape Town has assisted 152 guest houses and B&Bs with rates relief to the value of R2,7 million since the announcement of the national COVID-19 lockdown.
The hospitality industry has been severely impacted by the COVID-19 pandemic. Since the start of the national lockdown, the City has tried its best to offer assistance within its municipal mandate. This has included assisting qualifying businesses in the industry by giving them the option of temporarily changing their property classification, which in many instances has halved their rates bills.
‘We really empathise with our residents and businesses. We know that this has been small solace in some instances, but we are pleased that we could provide financial relief to 152 struggling businesses in the hospitality industry thus far. The COVID-19 pandemic has affected us all and the City is making every effort to help where possible. Since the end of March we have assisted with relief worth R2,7 million to the successful applicants and we encourage businesses in the industry to make use of the relief options put in place. The hospitality industry plays an important role in providing jobs in our city and we need to do all we can to protect these businesses and the people they employ. We also continue to offer assistance to vulnerable residents and those severely affected by the COVID-19 crisis. Residents are encouraged to apply for interest-free payment arrangements if they are struggling to make payment, and we are providing some R3,3 billion in support, as part of our normal relief offering,’said the City’s Mayoral Committee Member for Finance and Executive Deputy Mayor, Alderman Ian Neilson.
Rates relief to help alleviate financial burden
In accordance with the City’s Rates Policy, guesthouses and certain bed and breakfast properties are classified as business properties and are thus liable for higher municipal rates than ordinary residential properties. The property rating category would be classified as a business for rates purposes, where more than 40% of the bedrooms are used or are available for providing accommodation for temporary visitors at a fee.
However, due to the impact of the national state of disaster, subsequent lockdown and the dire state of the national economy, the hospitality industry is suffering a severe loss of business. Many establishments would therefore not currently have more than 40% of their bedrooms used by visitors at a fee.
There are three options available in terms of the Rates Policy:
- Continue to operate without change and be classified as a business property. If the account falls into arrears, the account holder can apply for payment arrangements.
- Close the operation and apply for the reclassification of the property as a residential property in which case, the account holder will not be able to operate as a guesthouse or bed and breakfast but the rates will be reduced because of the reclassification and all service related tariffs and charges will be amended accordingly.
- Reduce the footprint of the business operations to the extent that the property is predominantly used for residential purposes, and apply for reclassification of the property so that rates can be reduced.
The change in the property classification for successful applicants came into effect as soon as the various criteria were met and when approved in terms of the 40% rule. Relief for successful applicants was effective after 27 March 2020.
The change in use of a B&B or guest house to a residential property for the purposes of rates: the current special dispensation provided by the City does not affect the zoning or the land uses permitted in terms of the Municipal Planning By-law 2015.
These remain in place and are not changed. Furthermore, the business licence is not cancelled or suspended and remains in place. Therefore, once operations start up again the property use for property rating purposes will change back to B&B or guest house when 40% of the bedrooms are made available for short-term occupation again, and the rates will be adjusted accordingly.
All changes in use of a property can be adjusted from one property category to another on the valuation roll and therefore it will form part of a supplementary valuation roll. This can be objected to as per any other item on the valuation roll.
Contacts for assistance
- Please visit http://www.capetown.gov.za/City-Connect/Apply/Financial-relief-and-rebates/Organisations/apply-for-covid-19-business-support-for-your-guest-house-or-bed-and-breakfast for relief
- Application for the reclassification of property category: Please complete the Rates Classification Form together with the Data Collection Form as outlined below and submit it to: Valuations.RCC@capetown.gov.za
- Accommodation for essential services and isolation cases (WCG): https://www.westerncape.gov.za/
All income received from rates and tariffs is used for the provision of basic services, which is our main mandate as a municipality.
- We have made R3,3 billion available for rates and services assistance in the new financial year.
- We have also made relief available for those severely impacted financially by COVID-19.
- Interest-free payment arrangements are available for those who qualify.
- Visit capetown.gov.za/coronavirus for more information.