Are You Using Your Residential Property for an Unauthorised or Illegal Purpose?

Residential homeowners must be aware of the judgment handed down by the Supreme Court of Appeal (SCA) in the case of the City of Johannesburg Metropolitan Municipality v Zibi (234/2020) [2021] ZASCA 97 (9 July 2021). The outcome of this case carries significant implications for residential homeowners who utilise their homes for commercial purposes without the necessary authorisation from the municipality.

Rates payable by residential landowners are governed by the Municipal Property Rates Act 6 of 2004 (the Act). This legislation confers and regulates the local municipality’s power to value property and levy rates accordingly. The zoning of property is determined by various categories created by the Act, such as residential, commercial, or agricultural. One category for homeowners to be aware of, and which is discussed in detail in this judgment, is that of unauthorised or illegal use. When landowners use their property in an unauthorised manner, this category becomes applicable.

In this matter, the respondents (Mr and Mrs Zibi and their two children) owned and resided in a residential home consisting of five bedrooms and two bathrooms. They decided to rent out two of their unused bedrooms as accommodation to students and young professionals, thus using the home for commercial purposes. The respondents did this without prior authorisation from the municipality. Several inspections were completed at the property, and the municipality discovered that it was being used as a commune (a commercial concern). In response, the municipality issued several notices to the respondents to terminate the unauthorised use of the property and further imposed a penalty rate per the rate category for unauthorised or illegal use; however, the property was not rezoned. Due to further non-compliance with the notices, the municipality obtained a High Court order interdicting the respondents from continuing to use the property in an unauthorised manner. The matter escalated when the respondents launched an application in the High Court challenging the validity of the municipality imposing a penalty rate. The High Court found in favour of the respondents, and this matter was finally taken to the SCA.

The ultimate finding of the SCA was that where property is used in an unauthorised or illegal manner, it is within the municipality’s powers to impose penalties on homeowners. As a result, homeowners currently renting out space in their residential properties or intending to carry on a commercial concern in property zoned for residential use must obtain authorisation from the municipality to do so. Without such authorisation, property owners run a high risk of being penalised with higher rates.

Reference List

1. City of Johannesburg Metropolitan Municipality v Zibi (234/2020) [2021] ZASCA 97 (9 July 2021).
2. Municipal Property Rates Act 6 of 2004.

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