Axe Falls on Owners of Idle Erven

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By Frederick Philander WINDHOEK Pressure is mounting on proprietors and owners of undeveloped erven at Walvis Bay due to the introduction and imposition of fourfold tax levies on primarily residential plots by the local authorities at the harbour town. This is the result of the stringent legal application in November 2003 of the Local Authorities Amendment Act, 2000 by the Municipality of Walvis Bay. The authorities have warned landowners of further implications to themselves regarding the tax rates on such properties if such properties are not developed within a fixed time frame. The Walvis Bay local authority and the rest of the country spend millions of dollars on servicing erven, which are then sold to buyers and potential buyers. In many instances well-to-do buyers have become rich land barons to the detriment of many ordinary citizens who are subtly and sometimes directly forced out of contention by the bulk buyers of land in the country. According to Kevin Adams, Manager: Public Relations of the Municipality of Walvis Bay, some 640 residential erven lie empty and undeveloped in the town, costing the authorities great losses in taxes. “At one stage we had more than 1 000 such erven lying dormant and undeveloped. Thanks to the introduction of higher tax penalties on such properties under the new Act, this number has dramatically fallen. Landowners have started to build and develop their land,” Adams said. It is a known fact that sales of serviced erven that remain undeveloped cost the local authorities millions of dollars, which cannot be recouped. “The hardest hit areas subjected to the four-fold tax levies at the town are undoubtedly the better-off suburbs such as Lang Strand and Meersig, where land is quite expensive. Notwithstanding the penalties there is a steadily growing demand for erven in the town,” Adams said. According to the communications officer most of the dormant erven are found in: Narraville (180); Lang Strand (215); Walvis Bay Central (180): Meersig (50) and the most densely populated residential area, Kuisebmund (90). In an official correspondence the Walvis Bay Municipality formally informed the local landowners that: “The penalty rate is calculated at two (2) times the current land (property) rate payable to a local authority for the first two years that the property remained undeveloped since the promulgation of the said Amendment Act. A penalty rate of four (4) times the land rate applies if the property remains undeveloped for a period of five years from the date of commencement of the Act.” According to the statement the implication had been that any property that remained undeveloped would be penalised at a rate twice that of the existing one. “The land owner was therefore obliged to pay the normal rate as well as a penalty of twice that amount, resulting in a final monthly payment of three times the land rate until such time as the property was fully developed. The penalty rate falls away once a property is fully developed and a new rate is calculated based on the valuation of the buildings developed on the property. The walling of a property does not constitute development for the purposes of avoiding penalty rates, nor does the sale of the property to a new owner exonerate the new owner from compliance with the development period of the property, and the subsequent payment of penalty rates calculated as from 22 December 2000.” It went on to say: “As more than five (5) years have lapsed since the amendment of the Act, landowners of erven that have remained undeveloped for five years or longer since December 2000 will now be liable to pay the penalty rate of four times the land rate. A final monthly payment of the normal rate, plus four times the normal rate will therefore be levied.” The local authority warned that owners of undeveloped erven that have been dormant for between two and five years will be taxed in accordance with the penalty rate of twice the normal rate. A monthly payment in their case will therefore consist of the normal rate as well as a penalty of twice that amount. “The penalty rate does not influence the “improvement rate” payable as per the sale agreement of land purchased directly from the Municipality of Walvis Bay, which is levied separately over and above the newly introduced penalty rate and the normal rate,” the statement concluded.