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New valuations could involve rates shock

Jan 15 2012 15:58 Antoinette Slabbert

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Pretoria – Municipalities countrywide are making preparations for the next large-scale property valuation, which could impact property owners' pockets.

This is according to Ben Espach, valuations director at Rates Watch.

The lifespan of the initial valuation rolls in terms of the Municipal Property Rates Act is nearing a close. The rolls have to be adjusted every five years, which can be extended by one year.

Espach explained that although the act came into force in 2006, most municipalities drew up their valuation rolls between 2007 and 2009.

This was the first time that both land and improvements were taken into account and farm land was included on a broad scale, ignoring the former sliding scale.

Cape Town is already using a second roll, but most other municipalities, including Johannesburg, Ekurhuleni, Tshwane, Nelson Mandela Bay and Mangaung will only compile a new one next year. eThekwini is starting to use a new roll this year.

Municipalities begin preparations at least a year ahead of time. Tshwane's valuations start in February so that they can be published for comment in January next year. Johannesburg's tenders for the valuation work closed late last year.

Espach advised property owners to establish what the schedule is for the municipality in which their properties are situated.

Statutorily the authority concerned must inform the owner of the new valuation, but Espach said this does not always happen. If the permissible period has expired without an owner registering an objection, it becomes more difficult to correct faulty valuations and an owner could for the next five or six years be saddled with a high rates account.

Many property owners received a severe shock in the previous round, said Espach. Quite a number of municipalities appointed new assessors who did not know the area and many mistakes ensued.

Espach recounted the story of a group of houses in Johannesburg each valued between R6m and R8m. Following appeal, every valuation was reduced to around R3m.

In another case the valuation of a shopping centre was reduced by the appeal board from R555m to R323m by the appeal board. Some of these issues are still outstanding.

If, after an objection, a valuation is adjusted by more than 10%, the law determines that it must be reviewed by the appeal court. None of Johannesburg’s reviews have yet been finalised.

Espach said that if a municipality reappoints the same assessor, there should be fewer errors. The list will in effect merely be refined because the assessor knows the properties.

He said that although the market was flourishing at the time of the previous valuations, property values have in general since moved sideways rather than falling. He therefore expected little change in valuations, except where there has been exceptional growth in a specific area.

However, a fair number of properties were undervalued, to which no owners would have objected. He mentioned the example of various hotels in certain metros. Should the assessors correct these now, owners can expect heavy accounts.

Also, owners should be alert to where municipal boundaries have changed, he said. Tshwane's valuations were generally conservative, for instance, while those in the neighbouring Nokeng tsa Taemane were more market-related. These two municipal areas have merged and will now be treated alike.

Espach says the dates on which the valuation rolls are made available are usually indicated on that council's web page.

The law allows a minimum of 30 days for objections, but many municipalities extend this to 60 or 90 days.

His advice to objectors is to complete the forms assiduously, giving logical reasons for the assessor to adjust the valuation. To this end the owner can refer to comparative sales in the same area.

"If you have doubts, it’s better to call in the help of an expert."

 - Sake24

For more business news in Afrikaans, go to Sake24.com

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