Joburg flags financial risk, but claims ‘accurate’ bills

• Former homeowners in Johannesburg are still receiving municipal bills and threats months after selling their properties due to systemic billing errors.
• Law firm Van Deventer Dowlath & Marx highlights these post-transfer billing errors as a recurring pattern exposing sellers to financial risk.
• The City of Johannesburg's financial stability is threatened by these billing failures, with the Auditor-General flagging 76% of owed money as unrecoverable.
• Gross unpaid bills owed to Johannesburg have surged from R15 billion in 2014/15 to nearly R72 billion in 2024/25.
• Despite admitting to "billing system failures" and planning modernization for "improved accuracy," the CoJ claims 98% billing accuracy for active customers.

These post-transfer billing errors are no longer isolated incidents but represent a systemic problem, exposing sellers to significant financial risk despite having completed the property transfer process.

Former homeowners across Johannesburg are increasingly finding themselves entangled in municipal billing disputes, receiving monthly statements and even threats of disconnection long after they have legally divested from their properties. These widespread Joburg post-transfer billing errors are no longer isolated incidents but represent a systemic problem, exposing sellers to significant financial risk despite having completed the property transfer process.

Cor van Deventer, a director at the law firm Van Deventer Dowlath & Marx, highlights the severity of these CoJ municipal billing errors homeowners face. He notes that some former residents have even received notices for “illegal” meters they never installed. This recurring pattern underscores a critical flaw within the City of Johannesburg billing system, where legal severance from a property does not guarantee an end to financial liabilities.

The root cause of these persistent issues, according to Van Deventer, lies in structural deficiencies within the city’s administrative processes. Delays and mismatched records mean that while a property transfer might be recorded in one municipal department, this crucial information often fails to propagate across all relevant city systems. This internal disconnect results in accounts remaining active and generating bills for previous owners, creating ongoing challenges for those involved in Johannesburg property transfer billing.

The challenges faced by individual homeowners are symptomatic of a broader financial crisis engulfing the City of Johannesburg. The Auditor-General of South Africa has issued a qualified audit for the city, indicating significant concerns about its financial management. A staggering 76% of the money owed to the CoJ is deemed unlikely to be recovered, painting a grim picture of South Africa municipal financial risk.

The Centre for Development and Enterprise (CDE), a prominent think tank, has warned that the city is operating on an unsustainable model, spending funds it has not collected. Ann Bernstein, the CDE’s executive director, critically observes that Johannesburg has become "dangerously disconnected from financial reality," billing residents and businesses and recording these as revenue, yet a substantial portion of this expected income never materializes. This is evidenced by the dramatic increase in gross unpaid bills, which soared from approximately R15 billion in 2014/15 to nearly R72 billion by 2024/25, representing an annual increase of almost 17% over a decade.

Even the city’s own documents acknowledge these deep-seated problems. The CoJ’s Integrated Development Plan (IDP) for 2026/27 explicitly states that its revenue base has been eroded by various factors, including "billing system failures," emphasizing that "no other pillar matters if this one fails." Furthermore, the 2024/25 annual report admits that "missing customer records" impede invoice delivery and that "ineffective payment arrangements" delay debt recovery, directly impacting the city's financial stability and contributing to the issues highlighted by the Auditor-General Joburg audit.

Despite acknowledging severe financial challenges and systemic billing issues, the City of Johannesburg presents a contradictory stance on its billing accuracy. While its annual report claims a 98% accuracy rate for "bills to all active customers," the same IDP that identifies billing inaccuracy also outlines plans to modernize billing and metering systems. This modernization aims to transition from "passive billing to active revenue intelligence" to achieve "improved billing and meter accuracy," implicitly admitting current shortcomings.

Executive deputy mayor and finance MMC Loyiso Masuku confirmed in May that the city's revenue base is under pressure, with the collection rate declining from 88.6% to 86%. This drop is attributed, in part, to billing inefficiencies and revenue leakages, further undermining the city's financial health. Mayor Dada Morero himself has stated that "revenue collection and billing system accuracy remain priority areas requiring urgent attention," underscoring their fundamental importance to the city's ability to fund and sustain service delivery.

Adding to the complexity, Johannesburg, which contributes 16% of South Africa’s gross domestic product, projects a R2.1 billion operating surplus in its R97 billion medium-term budget for the current year, even as these significant threats to financial sustainability persist. This projection stands in stark contrast to the city's admitted billing failures and the Auditor-General's findings, leaving many questions unanswered, particularly as city spokespeople did not respond to specific inquiries regarding ongoing billing system issues and corrective measures.

Lawyers advising on property transfers in Johannesburg must be vigilant regarding persistent post-transfer municipal billing errors, which expose former homeowners to financial risk and potential disputes. This systemic issue necessitates proactive client communication and due diligence to mitigate ongoing liabilities despite legal severance from the property.

Source: Original reporting via ITWeb