Cape Town widens household relief as court ruling forces tariff rethink

Cape Town has expanded rates relief for lower- and middle-income households after a court ruling forced it to scrap tariff structures linked to property values.

The city has also reopened public comment on amendments to its 2026/27 budget, which expires on Wednesday, 10 June, ahead of the new financial year starting on 1 July.

The amendments follow the city’s decision on 22 May not to appeal the ruling that set aside its property value-linked levies and fixed charges.

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A key effect of the judgment is that Cape Town must revert to using water meter size – rather than property value bands – to determine fixed water and sanitation charges.

The city says this means properties valued below R2.8 million will generally pay more, while higher-value properties will pay less for fixed water and sanitation charges for meters up to 22mm.

To soften the impact, the city has proposed increasing the rates-free rebate threshold from the first R450 000 of a residential property’s value to R620 000.

The benefit will apply to all residential properties valued below R8 million, up from R7 million, while indigent benefits will also extend to the higher threshold.

Cape Town Mayor Geordin Hill-Lewis says the city is seeking to shield lower- and middle-income households from the impact of the ruling.

“This expanded protection will, on average, offset the rise in fixed charges for most properties under R2.8m due to the court ruling’s impact.”

The city argues that the court ruling constrains municipalities’ ability to use cross-subsidisation within tariff structures.

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“The main impact of the judgment is to limit the ability of the City – and all municipalities – to cross-subsidise to protect lower- and middle-income households,” Hill-Lewis says, adding that the city would engage National Treasury on future options.

City-wide cleaning tariff to be reversed

Cape Town will also reverse changes made in the current budget cycle to fund city-wide cleaning services.

Cleaning costs, which had been shifted into a standalone charge for residential customers in 2025/26, will move back into property rates.

As a result, the previously tabled 10.2% reduction in residential property rates will be revised to a 2.09% reduction.

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Commercial property rates will also rise, while electricity unit costs for commercial customers will fall due to the phased reduction of the electricity surcharge contribution to city-wide cleaning.

Residential electricity tariffs will remain unchanged.

Water and sanitation tariffs

Following the court ruling, fixed water and sanitation charges will once again be based on water meter size.

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“This … means that higher-value properties will pay less fixed charges, while lower-value properties will pay more than they do currently,” the city noted.

It therefore proposes additional measures to cushion the impact of the return to meter-size charging, including reducing the overall fixed-charge portion of tariffs, consolidating fixed tariffs for the most common meter sizes (22mm) and shifting more costs to higher-consumption users.

Read: Joburg wants households to pay 66% more to receive water

Under the proposal, water consumption charges would increase by R2.09 per kilolitre for usage between 10.5kl and 35kl compared with the March budget, and by R8.06 per kilolitre, excluding Vat, for usage above 35kl.

Similar increases are proposed for sanitation tariffs in those bands.

No cuts to infrastructure spending 

The city stresses that the ruling affects only the structure of future charges and not spending plans.

It says there would be no cuts to expenditure or infrastructure investment under the amended budget, which includes a R40 billion three-year infrastructure programme.

The broader budget includes planned spending on water and sanitation upgrades, electricity grid investment, roads, MyCiTi expansion, informal settlement upgrading and housing, alongside a proposed R6.8 billion safety and security budget for 2026/27.

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The city has also reiterated that it will not appeal the court ruling and will instead engage National Treasury and the Department of Cooperative Governance and Traditional Affairs on alternative mechanisms for cross-subsidisation within municipal funding frameworks.

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