1 March 2011

Zimbabwe: New Rates System for City

HARARE plot owners in each suburb now pay the same rates regardless of whether they have a house on the stand or if it is vacant.

Council has switched its residential rating system from one of charging separate rates for land and improvements, to one of rates on the land only.

The land rates are set in zones covering blocks of suburbs. Each standard plot, empty or built on, in each zone is charged the same rate.

The council has set the new land rate in a way that most ordinary people, those who own a typical house on an ordinary stand for their type of suburb, will pay the same or a little less under the new system.

Owners of vacant plots will pay a lot more than they are at the moment.

In fact, council expects to collect around US$12 million a month now, up from the present US$8 million in residential rates. And almost all that extra will come from owners of vacant land and from land speculators.

Even those suburban dwellers who have a single house on a double stand will only pay a little more than they are at the moment, and if the house is big enough they might not even see a rise.

No one with a single stand will pay more than US$30 a month, and most in the low-density areas will pay U$16 to US$26 a month for each stand, depending on the suburb.

There is one wrinkle, that the standard stand sizes have been reduced in two or three suburbs from what is now typical, so a handful of ordinary people will pay double, but even so they will still be under US$52 a month.

Residents of high-density suburbs, who have always in effect been taxed on land rather than improvements, see their rates remain at US$4 or US$5 a month.

Flats will remain on the present valuation system and flat owners will continue paying what they pay now.

HCC revenue collection manager Mr Regis Makwembere yesterday said the migration from land and improvements valuations to land only with the rates set by zoning was designed to encourage people to develop land fully or sell it to those who will.

Landowners now pay the same rates regardless of whether there is a house on the plot or not. So while house-owners see little change, and most will see a small reduction, owners of vacant land will pay the same as if there was a house on the plot.

This includes those who want to have huge plots with only one house on them.

Harare needs to boost its densities as the Master Plan in the 1980s for the city and its satellites recommended so strongly.

However, the city does win raising monthly residential rates revenue collection from US$8 million to US$12 million but almost all that extra comes from those with holdings of vacant land who were paying a pittance. A modest amount will come from those with double stands or who are deemed to have double stands.

The new rating system introduced last month will not affect commercial and industrial properties.

Depending on stand size and zone, some residents in Borrowdale and other low-density suburbs could pay over US$4 000 every month in rates. But they will need something like a small farm before they hit those rates.

"With the zoning system, we no longer consider improvements on the property. We only now go by land value and the zone in which the property exists," said Mr Makwembere.

Some residents were no longer informing council of improvements made on their properties to evade paying high rates.

Each zone has got a standard stand size.

Under the zoning system, the standard stand size is equivalent to a unit.

"We prepare property tax per each unit. For example in Borrowdale the average tax is US$26 per unit. If one is staying on 12.5 acres, he or she pays US$325. Those people with vast land are the ones who are going to be paying more rates per month. The resultant effect is that if you are holding land and you are not putting it to good use you will cry foul. The system discourages property holders from holding land for speculative purposes," said Mr Makwembere.

He added: "This forces such people either to put it to good use or subdivide the land and sell it to those who need it because that land is designated residential."

"Everybody living within a particular zone and are only occupying standard stand size are not crying foul," said Mr Makwembere.

He dismissed the view that the zoning system was tantamount to increasing rates through the backdoor.

He warned council would take action against residents who fail to pay rates under the new system.

"We are going to follow up and auction the land if they do not pay. We will follow all the procedures," Mr Makwembere said.

Mr Makwembere said prior to the zoning system, there were 19 areas (suburbs) that were being under billed.

"We will be able to rake more money with the zoning system than yesterday," he said.

Harare has been divided into 60 zones with people staying in most low density suburbs set to pay between US$18 and US$30 per unit depending stand size and zone.

Council notified residents about the zoning system on December 17 last year.

The migration from land and improvements valuations to land only rates, with valuations done by zoning, was done in terms of the Urban Councils Act chapter 252.

Reads part of the Act: "The assessment of residential property for rating purposes shall consist - calculating the number of rating units to be assigned to the property."

The last time such a revolutionary change was done as around 1906, when a huge differential between land and improvement rates was introduced.

Ordinary householders then, as now, were not effected since the land rate was pushed right up and the improvement rate was brought right down.

But a huge land speculative bubble in the Avenues was burst, which is why so many of the surviving houses in that area date from shortly after the change as that was when ordinary people were able to buy the stands.

And the extra money raised was put to good use; it largely paid for Harare's first dam, Cleveland Dam, and the associated water pipes.

Since then the gap between the two rates was gradually reduced until this month's switch to a pure land rate.

The full table of suburbs, stand size units and the rates for each unit appears on Page 4.

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