As part of its continued efforts to assist residents and businesses in Cape Town, the City of Cape Town is offering guest houses and B&Bs an option of applying to change their property classification if they need to as a result of the COVID-19 impact, which in some cases could cut rates bills in half. This is in addition to other financial relief options that have been made available to residents and businesses who are severely affected as a result of the COVID-19 impact. Options of offering their businesses for the purpose of essential service are also available.
COVID-19 is having a severe impact on the hospitality industry. Guest houses and bed and breakfast establishments that want to keep operating have the option of offering accommodation as an essential service. According to the regulations underpinning the national state of disaster, “accommodation used for persons rendering services, quarantine, isolation and the lockdown” are defined as essential services.
Within this context, the City is supporting the Western Cape Government (WCG) in its quest to identify willing partners in the hospitality industry to offer accommodation for front-line health care workers or persons who need to be isolated.
In most cases, the individuals being accommodated will pay for these services, but it is also possible that the WCG or a private sector partner will pay up to the recommended daily rate of R500 per person.
Please note that the property rating category used for business purposes will apply should an establishment take up this offer and more than 40% of the bedrooms are made available for occupation.
Rates relief to help alleviate financial burden
In addition to this, in accordance with the City’s Rates Policy, guesthouse 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 available to be used for providing accommodation for temporary visitors at a fee.
However, due to the impact of the national state of disaster and subsequent lockdown, the City is aware that the hospitality industry is suffering a 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.
Any impact because of a change in the property classification would come into effect from the date of signature of the application form by the owner, should it be approved in terms of the 40% rule.
‘Earlier in the week, we announced financial aid for those who are being severely impacted by COVID-19 and today this is the latest in our interventions. We are here to help where we can. It is a fine balance of providing assistance and also to do so in a sustainable manner that allows the municipality to continue providing essential basic services, which are primarily funded from rates and services income. These measures also need to be balanced against the very substantial additional COVID-19 cost which expense is likely to exceed R1 billion of additional City expenditure.
‘I must emphasise the City is not the government of last resort in this crisis. It is the National Government. We must always be careful that the decisions we take today and the impact that it has on rates and tariff income does not place an unnecessarily high burden on our residents and businesses in the future,’ said the City’s Mayoral Committee Member for Finance and Executive Deputy Mayor, Alderman Ian Neilson.
Contacts for assistance
- Please visit www.capetown.gov.za/coronavirus for relief measures announced earlier in the week
- 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): Please email firstname.lastname@example.org for further information