How Bo-Kaap’s rising property prices are threatening a community
But many of the neighbourhood’s cash-poor, asset-rich homeowners are resisting the temptation to sell
Situated on the mountains wrapped around Cape Town’s city centre, Bo-Kaap is considered prime real estate and has investors and developers spending millions on property in the area. But Bo-Kaap’s community consists of many lifelong residents that have inherited valuable property yet don’t earn high enough incomes to comfortably make ends meet. And because rates are based on property sales, these residents have become more vulnerable.
“Investors are not interested in you and your history and your culture. All they want to do is buy the houses, renovate them and sell them for more a year later,” says Shamil Jassiem (66) a lifelong Bo-Kaap resident. “To them it’s all money, but to those people who lived and died here, there is something else other than money attached to the place. That is the dilemma.”
“I was born in Lion Street. We were like a family on that street. My aunty stayed next to us. My uncle also stayed there,” says Faiza Larney (68). “I will never leave this place because everybody knows everybody and it’s a safe place to stay. If I fall sick in the road they will know exactly where I stay and who to contact.”
Larney owns her three-bedroom house on Jordaan Street where she has lived for 36 years. She lives with her daughter, two sons and two grandchildren. Her husband bought the house and when he passed away ten years ago she inherited it. She says she wants her children to inherit the house.
But Larney’s rates account is “R6,000 in arrears”, she says. She worked as an office assistant and retired two years ago. She gets R1,300 from her government pension and R3,000 from her private pension. Her daughter works as a supermarket manager and supports her mother financially as well.
Property rates pay for all services provided by the City of Cape Town excluding water and sanitation, electricity, and refuse collections. These include services like maintaining road infrastructure, traffic and street lights, and fire services.
As an example of how properties prices have risen in Bo-Kaap, consider Katherine (surname withheld). She bought a house further up on Jordaan Street for “just under R200,000” in 1999. She said it was valued at R1.6 million in 2017, a return of over 12% per year, far above inflation. It has been a brilliant investment. She lived in it until 2003 before moving to Johannesburg for work. She kept the cottage and now rents it out to a couple for R9,000 per month. She says the property is 99m2 including the courtyard and front stoep.
Nabeweya Abdulla (76) lives two streets away, on Lion Street and like Larney, was also born in Bo-Kaap.
She gets a R1,600 monthly pension. But her rates and water bill last month was R1,750. “It’s just getting worse,” she says. Abdulla’s father bought the house. It is dilapidated because she can’t afford to maintain it. She inherited the house after her father passed away in 2010.
She said she has received many offers for her property from private individuals but says she won’t sell. “We are a peaceful community and it is safe here. I don’t want to move to those dangerous places, I don’t know that life,” says Abdulla. “I would rather get a job, work my fingers to the bone at my age of 76, and fix this house.”
She says her daughter works for the police and lives with her, supporting her financially.
While GroundUp was speaking to Abdullah, another resident Shafiek Booley stopped to say hello. “We grew up together on this street and we still get along,” Abdullah said pointing to Booley.
Booley (55) also lives on Lion Street and says he “was born and raised in the Bo-Kaap”. He says he bought the house he lives in from his parents 35 years ago for “R70,000”, and says it is now worth “about R3 million”, an increase in value of more than 11% per year.
“I was the second youngest and my older siblings all had houses already so we agreed that I would buy the house from my family … It has worked out lovely for us.”
Booley says his rates are currently R1,300 a month. “Five years ago it was about R600. I am just keeping my head above water. As long as I put food on the table for the kids, that’s it. But we are struggling.”
He is self-employed, making a living from carpentry and welding. He has five children. “I made a promise to my kids that this house must never be sold because it means selling our heritage, our religion, everything.” Bo-Kaap is one of the oldest Muslim communities in South Africa.
Ward councillor Brandon Golding says, “As the City we understand that rates and service charges may place an additional financial burden on residents.” He encourages those who qualify to apply for the City’s rebates, which provides relief for pensioners and indigent residents earning up to R15,000.
Golding says that Council took public comment into account when it “reduced the rates increase from 7.2% to 6.5%” for the 2018/19 budget. He says this “should provide relief to residents, specifically those in higher property valuation areas, such as Bo-Kaap.”
But Larney says that she has had difficulty applying for the rebates. “I went to the Civic Centre twice to try and pay my rates and to apply for rebates. Each time they tell me something different,” she says. “First they said I need my SARS papers and my ID. Then when I went back with that they told me I need a bank statement. The communication is terrible. It is very difficult for someone in my condition to get to and from the Civic Centre.”
Abdulla says she is also currently in the process of applying for the rebates.
“Many lifelong residents have no choice but to sell their family homes, as their rates no longer reflect their incomes and historic disadvantages,” says Mikail Baker of Bo-Kaap Rise, a social movement campaigning for the neighbourhood to be granted formal heritage protection. “The City has shown little interest in aiding the blue-collar people of Bo-Kaap with reasonable rates. If this does not change, more and more residents will be forced to move.”
Golding says that the Council will be looking at alternative ways of generating revenue for the City “to decrease the burden on ratepayers.” He says this could be achieved, for example, by “ensuring that the City receives a more equitable share of external parking, trading space or property leases”.
How the City calculates rates
“Rates are worked out on each rateable property (therefore properties above R200,000) across the metro. Properties below R200,000 are not eligible for rates payments. The first R200,000 of a property is exempted from rates,” explains Councillor Johan van der Merwe, the City’s Mayoral Committee Member for Finance. “The General Valuation values approximately 870,000 registered properties in Cape Town for the purpose of billing fair rates to each property owner.”
He says that valuations are based on “actual property sales that have taken place in the open market over a period of two and a half years in a particular neighbourhood” and that “economic factors as well as the geographical factors are considered”.
Van der Merwe says rates are not for profit and the City only collects what it requires for it to operate efficiently and sufficiently.
Osman Shaboodien, chairperson of Bo-Kaap Civic and Ratepayers Association says, “Market value is a false formula that is not in the interest of the poor. Real value and market value are two different things.”
“Property sales are spurned by marketing. Bo-Kaap for instance is sold as a quaint, historical place with cobblestone streets and old Dutch houses. Nothing is said about the makeup of the community, the noise, the limited space,” says Shaboodien.
Other potential ways of charging rates
Shamil Jassiem suggests that residents be given the option of a ten-year period in which they pay lower rates provided they don’t sell the property in that period. “If you sell your house within the ten years you could then afford to pay the extra balance of rates which has been in suspense,” he explains. “After ten years that liability must fall away, so you don’t owe it anymore.” He says that because rates are based on property sales, this could be a way to take the burden off residents who have no intention of selling their properties.
Baker says a “a system of ‘legacy rates’” could work. “This would see residents’ rates remain in line with what they have historically paid, rather than in line with the rates of their foreign neighbours who have renovated homes into multi-million-rand luxury escapes.”
But Van Der Merwe says the City is bound by the Property Rates Act when it comes to charging rates. “Any special dispensation would have to be made by the Minister of Finance and this kind of proposal impacts on the revenue raising ability of any municipality, its financial viability and the services that can then be provided.”
Igsaan Sirkhotte says he has been living in the Bo-Kaap since 1980. He worked as a financial consultant and is now retired. He says he is able to pay his rates because he is on a private pension.
“It doesn’t seem like there are any morals involved in the decision making around housing in the city at the moment … It seems like they are running the city as a business,” says Sirkhotte. “Eventually it’s going to come to a point where my private pension is not going to be enough to pay the increase in rates.”
Jassiem says he will never leave Bo-Kaap. “My whole history is here, I have got no interest in moving anywhere else. I want to live here and when my time comes I want to die here.”
“Luckily for me I manage to pay my rates but there are lots of people who can’t afford to. They are retired, the pension is very little, if they were to pay the rates they won’t have any food to eat.”
He says that for many people who are struggling financially “the lure of R2 million for your house” is a tempting option. “But you have to sacrifice your history and community in order to get financial comfort. And you may not have a choice.”
© 2018 GroundUp.
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The City's argument that they are forced to stick with the current system because it is unfortunately done according to the existing law is a bit of a cop-out. I'm sure if they really wanted to, they can lobby to have the law amended.
I prefer rates based on your original buying price and if need be, an inflationary increase over time (to keep services such as roads, parks, libraries, clinics and storm water up to scratch) as a more equitable solution. Services such as water, sewage and electricity are paid for additionally anyway and should be self funding.
The person who buys a property at a high price is then rated accordingly. Thus community commitment is encouraged and the council saves by not having to do a valuation exercise every few years. Rebates can still apply and you should not be charged by the City for maintaining your house.
Why must a community be penalised with high rates due to greedy developers. They need to be protected This is the last heritage area remaining. Protect it don't destroy it. District Six was a lesson, a tragedy, don't repeat it. Save Bokaap, and the beautiful community that have lived there for centuries. They have done nothing to deserve this financial abuse, and a destruction of a beautiful community.