If you own property in South Africa, you may have had disconnection, reconnection, or service interruption issues with your municipal electricity supply over the past few years. Often, it turns out that a billing error or metering problem has caused charges to be added in error. It’s important to keep records of all your municipal payments, and to check your bills carefully every month. If charges have been added when they shouldn’t be, you can query them early and avoid problems further down the line.

With times as tough as they are, though, you might simply fall behind on your rates, electricity and water payments. If you’re in arrears even though you’re doing your best to keep up with payments, what options do you have? Can you arrange a payment plan to stop your essential services being interrupted?

Understanding your rates, water and electricity bills

South African municipalities charge rates on properties as a source of revenue to cover the cost of providing basic services and infrastructure to municipal communities. Property rates are levied on the market value of your property.

The Constitution gives municipalities the power to value and rate property in their area. The Municipal Property Rates Act (MPRA) and the Municipal Services Act (MSA) set out the regulations for municipalities and property owners when determining property values and setting service charges, as well as the roles and responsibilities of municipalities and property owners. They also provide guidelines on how property rates should be calculated and collected.

Falling into arrears

Failure to pay your rates or other municipal bills can result in financial penalties, legal penalties, reduced essential service provision (such as waste removal), or even the sale of your property. Continued failure to pay your municipal electricity or water accounts will lead to service disconnection. Apart from the hassle, you will also have to pay to have your services reconnected.

Cash-strapped local government authorities now police residents’ accounts more strictly. Most municipalities have the right to either throttle water supply or cut it off entirely, unless you have made a payment arrangement with the municipal finance department. If you owe an unpaid balance on your water bill and fail to respond to a pretermination notice within 14 days, many municipalities will disconnect your water supply and charge a reconnection fee.

The MSA gives municipalities the right to finance their affairs by charging fees for services, adding extra charges to those fees, charging property rates and other taxes, levies, and duties permitted by national legislation. As a property owner, you are legally entitled to a reasonable appeal regarding nonpayment or late payment of your municipal accounts, and you can negotiate a legally binding payment plan with your local municipality.

If you don't pay your rates and municipal charges, it also makes it much harder to sell your property. If you owe the municipality money on a property, or if you’re blacklisted and cannot get a rates clearance certificate because of outstanding municipal debts on another property, you will not be able to complete the property sale. Not paying your rates is also a breach of the terms and conditions of your home loan agreement with the lender.

Payment plans with your municipality

Municipal authorities apply local bylaws and regulations in different ways, but most of them do offer some kind of help if you’re struggling to meet your payment obligations. You could pay off your debt in instalments, or apply for assistance schemes at your municipality. However, each local government authority’s specific payment schemes, rebates, and available financial help may differ.

You could enter into a written agreement with your municipality to repay any outstanding amounts – and further amounts due (including interest) – in regular, consecutive monthly instalments. This agreement must be signed by a duly authorised officer on behalf of the municipality, and must comply with the requirements of the National Credit Act.

Generally, the municipality will not deal with attorneys acting on your behalf if your account has already been handed over for legal collection. So, if you want to request such an agreement, consult a legal expert to help you draft an offer before your debt gets to that point. Businesses have a different, more demanding regime for such arrangements, so proper legal advice is even more important.

Municipal debt relief

Johannesburg and other municipalities around the country do offer debt relief to vulnerable social groups, which allows qualifying customers to pay a lower percentage of their outstanding municipal debt when they enter a payment arrangement. These groups include pensioners and expanded-social-package (ESP) customers, some sectional-title customers, and some small businesses. The aim of these debt relief programmes is to prevent service disconnections for essential services while the debtor makes a payment arrangement.

In Joburg, customers eligible for debt relief can apply at walk-in centres or online via the e-Joburg portal. Various payment options are available, including debit orders, EasyPay at retail stores, or internet and mobile banking.

Customers in other parts of the country should contact their local municipality via the relevant credit control departments to set up a payment arrangement.

Although Nedbank cannot help you make payment arrangements with your municipality, we can help you manage your finances more effectively.