Are council valuations fair?

Valuations in Cape Town have been completed, with many homeowners having already received their valuations in the post. And if the angry reaction of many Capetonians is anything to go by, other provinces, where valuations are still to follow, have reason to be worried.

But are the complaints of Cape Town homeowners justified, and what do the experts say?

Fair or not fair?

"So far we have come across relatively few cases where the valuations have been out of line," says Bill Rawson, chairperson of Rawson Properties.

He believes that the much publicised hikes in residential property valuations in order to calculate rates have so far been reasonable — and relatively accurate.

While many Capetonians may protest their new valuations, they have not kept in touch with the rise in property values since the last valuation in 2000, before the boom. Since 2000, the average Cape home has almost trebled in value, Rawson says.

Rob Stefanutto of Sotheby's International Realty’s says valuations are very difficult to get right, and thus some councils may have missed the mark due to lack of knowledge.

"The problem with the valuations that I have noticed is the way that they have been achieved — they seem to be blanket calculations that have been taken on a square meterage calculations rather than taking into account the level of the apartment (in the instance of sectional title schemes) or any renovations or improvements done to the property itself."

Rounding off the numbers

Stefanutto notes that another "problem with the house valuations is that there is a lack of knowledge of the area, location and previous history of the properties, which all affect the values of these properties.

"Several of my clients have asked about their valuations, and some were fair, while others weren’t — I would say in general the valuations are about 10 to 15 percent higher than the actual value," notes Stefanutto.

"My personal property I would say is valued 15 to 17 percent higher than its actual worth. In any case I would say that the valuations are not the worst as it is a very difficult task."

And sectional title?

According to Rawson, the big challenge facing the city council team is to implement the decision to debit all sectional title owners directly rather than charging their body corporate with the total rates, water and electricity bills.

"We are now hearing of cases where the sectional title owner has received council valuations through the body corporate post box. This is definitely not acceptable. Organisations running bodies corporate with three four thousand members cannot be expect to act as referral or transit agents for the council. A huge administrative task now faces the council to get accurate direct addresses of all sectional title members."

New rate calculations?

The next question of course is how the city will calculate the new rates — while the new formula for rates has not been released yet, it's clear that the new targets will be much higher.

Rawson says the big worry is that higher rates might force those already struggling to make ends meet to sell their properties and switch to renting. How the rate increase will affect rentals also remains to be seen.

"This would be a pity, especially as it has always been city council policy to encourage home ownership," he says.

Stefanutto says that the secondary market will feel it the most, "as rate hikes mean additional costs. An increase in any form of tax is never a good thing, as it creates a slowing down and an uncertainty — and the property industry is a sentiment driven business."

So is your valuation fair?

While the experts generally believe the valuations are in line, what about your home? Did you receive a formal letter of valuation from the city council that was fair, or were you shocked when you found out at what the council values your property? Tell us your experiences here.

Article by: Thamar Houliston -