Big legal blow to South Africa’s best-run city

The Western Cape High Court has ruled against the City of Cape Town, declaring its implementation of property value-based municipal charges to be unlawful and invalid.

Under this tariff structure, fixed rates for services such as water, sanitation and cleaning are charged based on the value of the respective property.

The City first implemented this property value-based tariff structure on 1 July 2025, the beginning of its current financial year.

Two applications were brought against the City to challenge the imposition of this structure, first by the South African Property Owners Association (SAPOA) and second by civil-rights organisation AfriForum.

Both applications argued that these fixed charges were unfair and unlawful, and that the tariffs in question should only be charged proportionally to the actual usage of that service.

The High Court ruling, which was announced on 30 April 2026, ruled in favour of SAPOA and AfriForum against the City’s imposition of these value-based tariffs.

The ruling said these charges do not align with the South African Constitution, national legislation or the City’s tariff by-laws.

According to the ruling, the current tariff structure is to be set aside before the start of the City’s upcoming new financial year, on 1 July 2026.

AfriForum’s Manager of Local Government Affairs Morné Mostert said this ruling has implications for the country’s other municipalities beyond just Cape Town.

“Municipalities across the country will now have to re-evaluate their tariff structures based on the clear standard that the court has now set,” Mostert said. “Tariffs linked to consumption are not optional but a legal requirement.”

“This ruling comes at a crucial time in the budget cycle. It forces not only the City of Cape Town but also all municipalities to now correct their approach to the setting of tariffs.”

While the tariff structure is to be set aside by the start of the next financial year as per the ruling, it remains lawful and in effect until 30 June 2026.

The City responds

The City of Cape Town issued a statement in response to the High Court ruling on 30 April, the same day the ruling was announced.

The City said it was considering its legal options in light of the ruling, including a potential appeal of the High Court’s decision.

It also said it will model the Court ruling’s potential impact on Cape Town ratepayers, specifically lower and middle-income households.

Cape Town Mayor Geordin Hill-Lewis explained that the tariff structure was implemented as a form of cross-subsidising the City’s lower-income households through higher taxes on its wealthier residents.

“The point of using property values to determine fixed charges is to protect lower and middle-income houses,” Hill-Lewis said. “The alternative is for everyone to pay a flat charge, whether they are low-income or affluent.”

“The implication of today’s ruling might be that fixed charges go up for many families, and go down for more affluent families. That is the perverse implication of this ruling.”

The independent ratepayer advocacy group StopCOCT called on the City to reduce its infrastructure budget instead of charging higher tariffs on certain residents.

Hill-Lewis said this was an ill-advised solution, and that a lower infrastructure budget would reduce the functionality of the City and the dignity of its residents.

Cape Town Deputy Mayor Eddie Andrews explained in an interview with Newzroom Afrika that the only other option would be to add these charges back into the City’s property rates.

“We would need to engage National Treasury because they’ve asked municipalities to conform to their requirements,” Andrews said. “Hence we’ve structured the bill as what we’ve submitted before the courts.”

In its draft 2026/27 municipal budget, the City tabled a 10.2% reduction in its rate-in-rand calculation for Cape Town ratepayers.

Andrews said this would need to be reviewed with regard to the City’s modelling of the High Court ruling’s impact, with a potential increase of the rate-in-rand calculation now on the cards.