MBHASHE, Eastern Cape — Across the Eastern Cape, a growing number of substantial rural homes are being built on communal land, fundamentally altering the local economic landscape. However, because these properties are rarely surveyed or individually registered, they fall outside conventional municipal rates systems, creating a complex revenue challenge for local governments striving to fund essential services.
The landscape in rural municipalities is rapidly changing. Traditional homesteads now increasingly stand alongside modern houses that represent hundreds of thousands, and sometimes millions, of rands in private family investment. Yet, the financial relationship between these homeowners and the local municipality is vastly different from that of property owners in major metros like Johannesburg, Durban, or Cape Town.
Much of the land in these rural communities is communally or traditionally administered, meaning it is held for the benefit of the community rather than being privately owned. For residents like Sipatho Mzansi, building in this environment was a deliberate choice driven by family lifestyle and economics. Mzansi noted that the decision is often motivated by a higher quality of life, citing significantly less air and noise pollution, alongside the financial benefit of lower household maintenance costs.
However, these lower costs can come with a trade-off. In some communities, residents are forced to provide or maintain their own infrastructure, such as drilling private boreholes or arranging independent power solutions, tasks that urban residents typically expect from local government.
A few kilometers away, Petrus made a similar economic calculation. He left rented accommodation in town to build a permanent home for his children on traditionally administered land close to Duda. Petrus explained that acquiring the land did not involve purchasing a conventional residential stand.
“We just ask for a piece of land,” Zordaga said. “We give a small drink to the headman and some money for the site, around 100 rand only, for the occasion. That was all we paid. There are no rates here, no rental, nothing.”
Because Zordaga’s community is located closer to town and the N2 highway, it receives more services than deeper rural villages. His home is supplied with electricity by Eskom, and residents have access to communal water points and municipal refuse collection.
The absence of conventional property rates bills in these areas is not an oversight, but a structural reality of land administration. According to the Mbhashe Local Municipality’s Chief Financial Officer (CFO), municipal property rates depend on properties being identifiable and valued.
“In rural communities, the problem is that most, if not all, are not surveyed and they are not registered,” the CFO explained. “If a property cannot be placed on the valuation roll, the municipality cannot send a conventional property rates bill. Our billing system only looks at valued properties with erf numbers. Communal lands under the command of a chief or community do not have these, so we do not bill them.”
This dynamic places immense pressure on municipal budgets. To put the revenue challenge into perspective: for every 100 rand in the municipality’s budget, only about 25 rand comes from its own revenue, while the remaining 75 rand relies heavily on national grants.
Compounding the issue, the Mbhashe municipality currently collects only 51% of its own revenue, falling far short of the 95% benchmark cited by its CFO. Because the municipality does not service electricity or generate revenue from municipal water and sanitation in these areas, it is left relying on property rates and refuse collection as its major sources of own revenue. When collection rates lag, the entire funding model is threatened.
The situation highlights a growing political and administrative challenge. Communal land residents cannot be treated as conventional suburban ratepayers when their land tenure, property registration, and service arrangements are fundamentally different. Yet, municipalities must still govern these communities and confront rising demands for roads, water, sanitation, and refuse removal.
As rural wealth becomes more visible through significant private investment in housing, that investment does not automatically expand the municipality’s property rates base. Addressing this imbalance is now a focal point of broader policy discussions.
“What is currently happening is a revision on the White Paper on Local Government,” the CFO noted. “That revision seeks to address distressed municipalities and revenue diversification, because municipalities are so restricted in terms of what revenue they can collect.”
Ultimately, when political parties campaign in these areas, the central question is no longer simply why households do not pay rates. The pressing issue is determining a fair and substantial way to fund local government in communities where land ownership and service delivery operate outside traditional frameworks. Regardless of whether funding comes from rates, service charges, or national grants, residents will continue to judge local government on a single, defining metric: what actually reaches their communities.