Cape Town budget triggers fresh clash over household bills

The City of Cape Town’s draft 2026/27 budget has triggered a sharp dispute, with officials insisting increases are broadly in line with inflation, while ratepayer groups warn that total municipal bills will rise “significantly higher than inflation” over the next three years.

Read:
Cape Town trims rates, caps tariff hikes in latest budget
Property owners, ignore the new valuation at your peril

At issue is how the impact on households is measured – whether through individual tariff changes or the combined effect of property valuations, service charges and fixed fees.

Tariffs versus total bills

Siseko Mbandezi, mayoral committee member for finance, said in response to questions from Moneyweb that increases for the 2026/27 financial year are “inflation-related (with the exception of Eskom’s increase)”.

The Cape Town Collective Ratepayers’ Association (CTCRA), representing 57 ratepayer associations, however argues that focusing on individual tariff lines understates the true impact on households.

“If one adds the effect of the other charges (water, sanitation, city-wide cleaning), then a very different conclusion must be drawn,” it says.

The association, which joined the South African Property Owners Association (Sapoa) as an amicus curiae (friend of the court) late in 2025 to challenge the city’s property-value-based fixed water, sanitation, and cleaning tariffs, warns that recent property valuation increases and draft tariffs are (again) presenting ratepayers with increases “well above” inflation.

“[These] are eroding the disposable income of residents to the point that some will be forced out of their homes,” CTCRA argues.

In the current budget, the city has proposed a 10.2% reduction in the “rate-in-the-rand”, alongside an increase in the rates-free threshold to R500 000, now applicable to properties valued up to R8 million (previously R7 million).

Read:

The measures are designed to cushion the impact of higher property valuations. Cape Town Mayor Geordin Hill-Lewis said in his budget speech earlier that “around 60% of homes are set to get a property rates decrease or no change in rates at all”.

However, the CTCRA says it accepts that the reduction “will bring some relief”, but argues that the overall picture is “misleading”.

It adds that average freehold valuation increases are 26% across Cape Town. More than 400 000 – or 69% of freehold properties – have seen valuation increases of 11.3%, “which is where the rates will increase despite the rate-in-the-rand-decrease”.

Read:
Rising rates rage: Cape Town homeowners push back
Geordin Hill-Lewis hits back at Sapoa tariff court challenge

While the city emphasises that residents can use its online calculator to assess their individual bills, CTCRA argues that the claim excludes key factors that drive up costs.

“If one adds the effect on the other charges … then a very different conclusion must be drawn,” the association says.

In its view, focusing on property rates alone does not reflect the reality of what households will pay each month.

Who carries the burden?

The CTRCA says properties above R4 million will face annual increases exceeding 10% for the foreseeable future, due to the combined effect of valuation increases and the city’s tariff design.

Mbandezi however insists that the rates burden is more evenly distributed than is often assumed.

“Rates contributions are spread far more evenly across property value bands than people realise – it is not just the middle or affluent paying by any means,” he says.

Residential ratepayers in the R3 million to R7 million property band (constituting around 15% of total residential rate-paying properties) contribute roughly 30% of rates income.

Read: Cape Town punts growing middle class to sustain services [Jul 2025]

Properties valued between R1 million to R3 million (approximately 50% of residential ratepayers) contribute roughly 40% of total rates.

Around 25% of total rates is collected from properties valued between R7 million to R500 million, while 5% of total rates come from properties in the R450 000 to R1 million band.

Rising reliance on ratepayers

In its own analysis of the budget, the CTRCA notes that the proportion of the budget that is funded through ratepayer revenue is increasing from 68% in the current year to 72% in 2028/29.

“[This] is while the operating budget increases by 20%. The number of properties expected to pay rates will only increase by 5%, which means the burden on ratepayers will (again) increase substantially over the next three years.”

The city acknowledges that property rates are “a significant revenue source … to help pay for shared services for all” and says affordability is weighed carefully in setting increases.

However, Mbandezi notes that there are “many variables” that play into how municipal bills change over time, “not all of these being within the city’s control. With each year’s budget, the city will always make a fresh assessment on how to balance the running costs of the city and affordability for residents”.

Infrastructure vs affordability

The city links its tariff path to a large infrastructure programme, with a R13 billion capital budget for 2026/27, of which R5 billion will be funded through external borrowing.

It says this spending is essential to meet the needs of a growing city and to support economic growth.

“Cape Town’s capital budget contains essential basic infrastructure projects to meet the needs of a growing city,” Mbandezi says.

CTCRA says it does not oppose infrastructure investment, but questions its pace and funding.

It argues that projects could be spread over a longer period or supported by a greater share of national funding to reduce pressure on ratepayers.

Read: The City of Cape Town’s annual financial statements

Mbandezi emphasises that the city has availed more than R8.3 billion in rates and services relief, expanded indigent support, and has a collection rate of 97.3% as evidence of strong financial management and public trust.

CTCRA, however, warns that the budgeted increases of 9% to 10% for each of the coming years, combined with valuation increases of property, are unsustainable.

The association has called on the city to “rethink the approach that it has to the budget from the ground up”, arguing that current trends risk placing an increasing strain on households.

* Cape Town residents can comment on the draft budget until 30 April.