The Buffalo City Metro has been forced to write off R27m in rates owed by one of the city’s top property management companies after it successfully challenged its municipal bill of almost R33m in court.
The write-off was approved at a recent council meeting.
The metro had placed Own Haven Housing Association — a social housing company which owns a number of rental accommodation establishments for low-income earners in KuGompo City — in the wrong rating category.
After a court ruling, the city has been forced to write off R27m of the R32.9m debt originally owed to it by Own Haven.
A lengthy standoff ensued when the municipality classified Own Haven’s properties as residential, instead of rating it as a public benefit organisation (PBO).
The company had at some point withheld its rate payments, arguing that as a PBO it should not be charged under the residential rating category.
This, it said, was based on the fact that social housing institutions were registered as PBOs in terms of the Income Tax Act 58 of 1962.
The R32.9m municipal debt, for a number of its properties in KuGompo City, had been accumulated between 2019 and 2025.
In late 2025, the high court in Makhanda ordered that the company should pay just R5.9m of its initial debt as a final settlement to BCM.
The accumulated rates related to Own Haven properties such as Skyview, Southernwood Square, Reservoir Mews and two other properties in the metro.
As Own Haven considered that they were at all times entitled to be treated as a Public Benefit Organisation, our view is that it should never have been necessary that the matter proceed to court and that the municipality should have engaged openly on this matter
Attempts to get comment from Own Haven or its attorneys, were unsuccessful on Thursday.
However, a report tabled before council last week by the metro’s acting chief financial officer, Vincent Pillay, revealed that Own Haven had been embroiled in a protracted battle with the metro for its rating status to be changed from residential to the PBO category.
“Own Haven properties were categorised as residential properties in both the 2017 and 2022 valuation rolls,” Pillay wrote.
“In accordance with the BCM property rates policy, the rates levied during the validity period of these valuation rolls were based on the residential tariffs applicable at the time.
“In 2018 and again in 2023, Own Haven submitted applications requesting a change in the rating category of its properties, from residential to PBO, on the basis that social housing institutions are registered as such in terms of the Income Tax Act 58 of 1962.
“Their applications were, however, unsuccessful,” Pillay wrote.
This was because, in terms of the Municipal Property Rates Act 6 of 2004, social housing institutions were not recognised as PBOs for municipal rating purposes.
After its application was rejected by the city, Pillay said, Own Haven disputed its property rates bill, withheld payment and pursued the matter through the courts.
In September 2025, the company was ordered by the high court to pay only R5.9m of its outstanding R32.9m municipal bill for the financial years 2019 to 2025.
The court also ordered that BCM had no further claim against Own Haven in respect of property rates for the 2018/2019 to 2024/2025 financial years.
The city was ordered to pay 20% of the legal costs in the matter.
Pillay said during the 2025/2026 financial year, BCM amended its property rates policy “to introduce a new rating category for social housing institutions, with a tariff equal to that applied to PBOs”.
Pillay then recommended to the council that in light of the court order, the remaining amount of R27m should be classified as irrecoverable debt and written off.
Council agreed with the recommendation.
Pillay had warned that failure to adhere and implement the court order “would expose BCM to legal risk, including contempt of court proceedings and reputational harm”.
He told council that the write-off represented “a significant reduction in the municipality’s collectible revenue for the period under review”.
The city had intended to appeal against the court ruling but later withdrew its application.
DA councillor Geoff Walton said on Thursday that the metro’s authorities could have handled the dispute differently.
“As Own Haven considered that they were at all times entitled to be treated as a Public Benefit Organisation, our view is that it should never have been necessary that the matter proceed to court and that the municipality should have engaged openly on this matter.
“Had they done so, a similar agreement to that imposed by the court could have been reached outside of the court process,” Walton said.
Daily Dispatch
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