Back to the future

22 March 2015 Weekend Argus Property – 2015 Budget provided little relief for building and sectional title owners

The budget speech tabled in Parliament on Wednesday 25 February 2015 shed light on the future of our wallets. Finance Minister Nhanhla Nene just about shocked taxpayers when he disclosed that the bulk of the middle income earners will be relied on to increase the state’s tax income.

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According to painting, waterproofing and construction company, Indawo’s, managing director, Geoffrey Jäck, this has a direct impact on the ability of homeowners to carry out vital restorative renovations to their properties. Sectional Title schemes rely heavily on levies to maintain property values and an increased tax burden seriously hampers the collection of special maintenance levies. A corresponding increase in the fuel levy and electricity tariffs will also hit consumers hard, adding to their woes, which were relieved somewhat recently with the drop in fuel prices.

The minister’s allusion to the fact that the VAT rate may be affected in the future did little to allay the fears of business owners and consumers alike.

Jäck indicates that the construction industry will continue to face challenges, especially as the volatility of the economic climate plagues businesses across South Africa and the world. While infrastructure development has been resilient in tough economic times, it is the peripheral businesses that bear the brunt of the budget.

Managing agents and sectional title owners, in particular, will have to balance their own budgets carefully if they are faced with large restorative maintenance projects. The burden on homeowners will impact the ability of these complexes to undertake some of the projects.

Construction companies, in turn will also be faced with challenges to meet expectation and budgetary constraints from managing agents and sectional title owners. But Jäck says that nothing is a surprise when it comes to the budget speech. The construction industry has been faced with these challenges before and being a large contributor to employment in South Africa, has always found ways to keep head above water.

Indawo can be contacted on 021 941 5000 or email info@indawo.biz.

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