The eThekwini Municipality is reviewing hostel rental tariffs for the 2026/2027 financial year, which will come into effect on July 1, 2026. The municipality was concerned that revenue collection remains critically low, with less than 5% of billed revenue being recovered.
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Since 2005, the eThekwini Municipality has invested over R1 billion in upgrading and the construction of 4,878 new family units within hostels.
A report from the municipality’s Human Settlements committee revealed that the total rental billed for all 10 hostels in the past financial year was R56.6 million, but revenue collection remains critically low, with less than 5% of billed revenue being recovered.
This issue arose during the review of hostel rental tariffs set to take effect on 1 July 2026.
In motivation for proposed rental increases, the municipality stated that they provide sustainable and affordable rental housing to qualifying beneficiaries, while ensuring that associated facilities are maintained in a safe and functional condition through ongoing maintenance, general upkeep, and repairs.
The municipality, in its report to council, said that these services incur operational costs, which are reviewed and adjusted annually in line with applicable legislative provisions, inflationary pressures, and other cost drivers associated with service delivery.
The report outlined that operating expenditure for hostel property management services in the previous financial year amounted to R1.076bn, of which R860.9m was attributable to water and electricity costs.
Rentals currently being paid are: sharing non-upgraded bed space (R88); single room non-upgraded (R143); sharing upgraded bed space (R197); single room upgraded (R311).
Rental for a two-bedroom unit (R865), a three-bedroom unit (R1,162), and a four-bedroom unit (R1,459) are also being reviewed. Rentals also being looked into are the KwaDabeka sharing bed space (R76); the KwaDabeka single room (R122), and the KwaDabeka two-bedroom units (R408).
“To sustain the provision of basic services within hostels, a tariff increase is proposed to augment the budget for services rendered. This proposal will be subjected to the prescribed public participation process in compliance with statutory requirements,” the report stated.
The municipality stated that a decision will be made following the completion of public participation consultation processes regarding the 2026/2027 budgets.
Rental hikes are also expected for the 4,575 rental housing units throughout the municipality. The current monthly rental for housing units ranges from R50 to R2,500.
The municipality stated that revenue generated from these rentals is insufficient to meet the operational and maintenance costs required to sustain the facilities, thereby placing financial sustainability at risk.
During his draft budget speech in March 2026, eThekwini Mayor Cyril Xaba said the Human Settlements Unit is responsible for the delivery of new housing units and the management of hostels and rental stock.
“We have a housing backlog of an estimated 503,000 households, which is growing due to rural-urban migration. The capital budget of R647m will be spent on the building of new low-cost houses in 2026 and 2027, infrastructure development, and providing interim services to prioritised informal settlement dwellings,” he said.