Your rights on rates
Rodney Hayter

As we close in on that time when municipalities try to squeeze extra income from ratepayers the latest edition of Intellectual Property, a Pam Golding Property Group publication, gives an insight into new legislation.

Property rates are taxes on the ownership of property, which are based on the market value of your property and used to fund various municipal services, including but not limited to sewerage, refuse removal, libraries, roads and pavements provided by the municipality in your specific area.

Expect then a municipal official knocking on your door to collect information for the new municipal valuations being required by the recently promulgated Municipal Property Rates Act (MPRA) as they require new valuations on your property to determine new rates for the 2007/2008 municipal financial year starting on 1 July 2007.

The municipal value is worked out by assessing the property’s market value including the land and improvements at the date of the valuation. The main changes introduced by the MPRA are that a fixed residential property tax rate will in future be used and that the standard rebate previously used will fall away.

The Act further provides that properties have to be re-valued every four years and that the improved value of the property must be the amount the property would have realised if sold on the date of valuation in the open market by a willing seller to a willing buyer.

Valuations can be done in person by officials but the Act also states that “comparative, analytical and other systems and techniques, including aerial photography and computer-assisted mass appraisal systems” be used for areas where inadequate market related data exists.

Municipalities have not yet decided on the rates which will be charged.

According to the city of Cape Town’s website, the city council has increased rates “in line with or below the inflation rate, and this is not expected to change. The rate (or cent-in-the-rand) will be adjusted to compensate for the general increase in values.”

The MPRA does make provision for the council to set out criteria for exemptions, reductions and rebates based on different income levels and other relevant factors in its rates policy. It further details that such policies must be available for public comment and input for a period of at least 30 days at the municipal offices and libraries or on their respective websites (if any).

The first R15 000 of value will be exempted and many properties such as nature reserves, churches, national parks and botanical gardens will also be exempted, but for the first time agricultural land will be drawn into the rates net. Other exemptions can include inter alia indigent owners, owners dependent on social grants or pensions, owners temporarily without an income etc.

Homeowners can only lobby their councillors about the level at which property rates are to be levied or their local rates policies, and they also have the right to review and challenge the valuations of their individual properties. To prevent owners paying more than what they should, they should be aware that the MPRA makes provision that the city and town councils must afford owners at least 30 days from the time the completed valuation roll for a municipal area is published to review and object to the data on record for their respective properties at public venues.

The publication and display of the rolls must be announced in a local newspaper once a week during the two weeks before publication and display, which notices will be in all three official languages of each particular region.

The city councils of Cape Town, Johannesburg and Durban have indicated that the publication and display of the data lists will be physically displayed in different local venues and also online for the comfort of property owners. Such lists are expected to be available in February 2007 in the aforementioned areas. The city of Cape Town has been revamping its website (capetown.gov.za/propertyvaluations/is) which will carry all the information and news about the valuations and rates levied. It will allow owners to check the physical data about their properties online, but will not have completed valuation rolls as yet.

Handling of your objections

If you are unhappy about the levy charged, you may lodge an objection with the municipal manager of the relevant region by completing and handing in a specific form for that purpose. The objection will then be handed to the municipal valuer. If he or she accepts the objection, an adjustment will be made unless it is more than 10% up or down, in which case the objection will be referred to an Appeals Board.

An objector can also lodge an appeal with the Appeals Board if he or she is not satisfied with the decision of the municipal valuer. Owners with objections will be informed in writing of a date when a formal valuation board (headed for example by a retired magistrate and consisting of independent people with a property background) will be hearing their objections. The owner will be entitled to appear in person before the board to state his or her case.

Owners must take care that enough preparation should be done and information gathered in respect to the criteria, procedures and the terminology used before the hearing starts. While the objections and appeals are being heard, objectors will still have to pay the rates due from the effective date and, depending on the outcome, will either be repaid or will need to pay in the excess amount from the effective date.

Factors that should be taken into account when the valuations and appeals for adjustments are being considered could be objective physical data, subjective environmental data or both. Obvious objective data can include information about the number of bedrooms, bathrooms and kitchens; the number and size of garage/s; the size of the erf and the house as well as any other improvements like a swimming pool and tennis court.

Other objective data like the roof covering, type of building materials and finishes could also impact the value and therefore the rates applicable, together with factors like bad cracks or other physical elements, will have the opposite effect. As far as environmental factors are concerned, an area where you have fantastic views of Table Mountain will obviously increase your value compared to a property which is blocked by a high-rise block of flats and you are able to smell the rubbish collection point in the building’s backyard or where an industrial area or squatter camp has developed next door.

Noise levels, how busy your street is, security and typography – such as flat or steep earth or wet and marshy conditions – are all value-forming attributes in determining your individual property value and property rate. Owners should always ask the valuer for the sales data used for the specific area and compare those figures with the prices and information of properties sold in the area.

Article by: Rodney Hayter - www.rodneyhayter.com