The valuation countdown
| Dont get your knickers in a knot the minute you
receive news of councils new valuation for your home, as just because
your propertys value has increased, doesnt mean that you will
be paying higher rates
If you live in Cape Town you could be one of 735 000 property owners who will receive a letter in the post from the City, informing you of the new value of your property. Gautengers will be next with the other provinces following shortly after.
When and how?
These valuations are for the year 2005-2006, and form the supplementary valuation roll, which is brought out first, so that property owners can object to valuations before they come into effect on 1 July 2007.
Gautengs supplementary roll will be released on 21 March 2007, and the new policy is expected to be rolled out from 1 July 2008, with other provinces following later.
The new valuation date for Capetonians is 2 July 2006, meaning that the valuation must reflect the market value of the property on that date. It is a requirement of law that council value the properties at market value, including both land and improvements. The previous general valuation was carried out on 1 January 2000.
These valuations are based firstly, on the propertys location by suburb as some suburbs are in more desirable locations than others, and various properties in an area may have a similar location value.
Secondly, the area of the land generally the larger the property, the greater its value.
And thirdly, the rights of the property each property is granted certain building rights by the city's planning department, and these are key to the property's value.
Valuations and municipal rates
You dont to get worked up just yet over how your rates are going to rocket, as not all property owners will see their rates increase.
Although valuations are used to calculate the rates that you will pay, they dont necessarily mean higher rates. Increased values don't of their own necessarily lead to an increase in the amount of rates paid. Rather the city will reduce the cents in the rand payable in each category, to compensate for the overall increase in values.
The main changes introduced by the new Municipal Rates Act are that a fixed residential property tax rate will in future be used and that the standard rebate previously used will fall away.
When your council considers the implementation of rates based on the new valuation roll, they will need to consider whether to increase the residential rebate or not. The Act also makes provision for a council to set out criteria for exemptions, reductions and rebates based on income levels and other criteria in its rates policy, which are also subject to public approval.
Therefore, what is more relevant for an individual property owner with regards to the valuation process is whether their property has increased by more or less than the average increase in their category.
For example, if a residential property increased from R200 000 in 2000 to R600 000 in 2006, its increase factor is three. As this factor is less than the average residential factor of 3.8, it will mean that this property will likely see a lowering of its rates burden, before the addition of any general increases that the council may wish to impose to increase levels of service delivery.
Irvine Florence of the Johannesburg Citys department of finance says on www.joburg.org.za, the new legislation requires that assessment rates are to be levied based on the market value of land plus improvements. This also means the present rate is going to reduce but we cannot tell by how much it is going to reduce. All this will be determined after the rates policy has been approved and implemented.
Some residents may see their property rates increase, while others may pay less, depending on the value of improvements," says Florence.
Can you object to valuations?
After a municipality has completed its valuations it invites the public to inspect the property valuation roll within a stipulated time frame, and to raise objections within that stipulated time frame.
Should you not be satisfied with the market value your property reflected in the property valuation roll, you can lodge an objection.
On finalisation of the consideration of objections, if there is evidence that the market value reflected on the property valuation roll is wrong, the law requires the municipality to correct the situation, and where such correction results in rates refunds to the ratepayer, the municipality is obliged to refund the ratepayer. In the case where the ratepayers property was undervalued, the ratepayer is obliged to pay the additional rates to the municipality.
Residential valuations for Cape Town
In Cape Town the total valuation of all properties in the city increased from R195-billion in 2000 to R654-billion in 2006 a factor of 3.4.
Value increases have varied across rating categories, with the residential sector's values having increased from R125-billion to R471-billion a factor of 3.8 having risen from 64 percent to 72 percent of the total valuation.
In the same 6.5 year period, the Absa House Price Index increased by a factor of 2.98, indicating that there has also been a fair amount of growth in the Cape Town residential sector above the average house inflation rate.
For more information on Cape Town valuations you can visit: www.capetown.gov.za.
Article by: Thamar Houliston - www.iafrica.com