Understanding the City of Cape Town’s New Fixed Water Charge: What It Means for Your Sectional Title Scheme

By Auren Freitas dos Santos

In July 2025, the City of Cape Town introduced a significant change to the way it calculates the fixed basic charge for water. Until June 2025, this fixed charge was determined by the diameter of the pipe supplying the sectional title scheme. Under the City’s 2025/2026 budget, however, the fixed charge is now based on the municipal valuation of each property.

This new “combined tariff” methodology works as follows: the City assigns a tariff to each unit in a scheme, depending on the property’s value, and then adds these tariffs together to calculate the scheme’s combined fixed charge. The City bills this amount as a line item under the water section of the scheme’s monthly municipal account.

Because the methodology links the charge to individual unit valuations, some sectional title schemes have decided to apportion the fixed charge directly to owners, showing each owner’s “assessed tariff” as a separate item on levy statements. This article explains why this approach is incorrect.

The Fixed Charge Remains an Administrative Expense

Despite the City’s change in methodology, the nature of the charge itself has not changed. It remains a municipal charge for the supply of water, and as such, it falls squarely within the administrative expenses of a body corporate.

Section 3(1) of the Sectional Titles Schemes Management Act, 8 of 2011 (STSMA) is clear:

“A body corporate must perform the functions entrusted to it by or under this Act or the rules, and such functions include—

(a) to establish and maintain an administrative fund which is reasonably sufficient to cover the estimated annual operating costs—

(ii) for the payment of rates and taxes and other local municipality charges for the supply of electricity, gas, water, fuel and sanitary or other services to the building or land.”

In terms of section 3(1)(f), the money in the administrative fund must be raised “by levying contributions on the owners in proportion to the quotas of their respective sections.”

The fixed basic charge for water is therefore a “local municipality charge for the supply of water” and must, by law, be recovered from owners via their participation quotas (PQ). Treating it instead as if it were a separate levy linked to individual units’ valuations contravenes the STSMA.

It is also important to note that the Community Schemes Ombud Service (CSOS) has issued a practice directive cautioning schemes that all items of expenditure that normally form part of the administrative fund levy must be included in the scheme’s levy calculation.

The directive goes so far as to warn:

“Community Schemes that do not include all payment items that would normally be part of the administrative fund levy in the calculation of the scheme levy are committing an act of dishonesty and CSOS will be entitled to refer the matter to the National Prosecuting Authority to take appropriate steps where necessary, in line with section 34 of the CSOS Act which pertains to penalties and offences.”

It follows that a fixed water charge, regardless of how the City calculates it, is a standard municipal charge that must be met from the administrative fund. To apportion it as if it were an exclusive-use charge tied to unit valuations would, in our view, be unlawful.

Constitutional Concerns with the City’s Tariff Model

Beyond sectional title law, we believe that it is worth noting that the City’s new tariff model raises broader legal and constitutional concerns. By linking the fixed charge to municipal property valuations rather than to measurable consumption or the cost of service provision, we are of the opinion that the City risks violating the principle of cost-reflective tariffs.

Section 74(2) of the Local Government: Municipal Systems Act, 32 of 2000 requires that municipal tariffs be equitable, cost-reflective, and based on actual use of services. The City has not provided any technical justification or econometric analysis to demonstrate that property values bear a rational relationship to the cost of supplying water. Without this, the methodology appears arbitrary and inconsistent with the law.

This amounts, in practice, to cross-subsidisation: households in higher-valued properties may be paying significantly more for the same fixed water connection as those in lower-valued properties. In our view, this is unfair and constitutionally questionable.

Conclusion

​​The City of Cape Town’s shift to a property valuation–based “combined tariff” has caused understandable confusion within community schemes. However, the underlying legal position has not changed. The fixed basic water charge is, in substance and in law, a municipal charge for the supply of water. The STSMA requires that such charges be treated as administrative expenses of the body corporate, funded through the administrative fund and apportioned strictly on a participation quota basis.

Attempts to recover the charge directly from owners according to their property valuations not only conflict with the STSMA but also run afoul of CSOS guidance.

At a broader level, the City’s tariff model itself raises serious constitutional questions, as it departs from the principles of equity and cost-reflectivity that underpin municipal tariffs in terms of the Municipal Systems Act. Until this issue is addressed, bodies corporate must ensure that their own practices remain beyond reproach by adhering to the clear statutory framework.

In short, while the City’s method of calculation may be open to challenge, the duty of trustees is to comply with the STSMA: the fixed charge must be paid from the administrative fund, and contributions must be levied on the basis of participation quotas.

Specialist Community Scheme Attorney (LLB, LLM), Auren Freitas dos Santos, is a Director of The Advisory, a boutique consultancy specialising exclusively in community schemes law. Reach out to him via email at info@theadvisory.co.za  for a no-obligation quote to discuss this topic in more detail.