Time To Contest A Municipal Property Valuation?
Property rates will be going up for many homeowners in Cape Town as the local municipality recently released the latest valuation roll. This at a time when electricity will soon be increasing and the interest rate keeps climbing. What many of these owners might not realise though is that these valuations can be appealed against.
The Municipal Property Rates Act is national legislation that empowers municipalities to raise rates for the purpose of funding the local municipal budget. These valuations have to be conducted at a minimum period of every four years through the City of Cape Town, for example, conducts a valuation every three years, ostensibly to lessen the impact of value changes on homeowners.
“The general valuation is a certainly a necessary tool, but at the end of the day a property valuation is just that – an assessment of what a home is worth and it is open to debate”, says Bruce Swain, MD of Leapfrog Property Group.
How the valuation is conducted
The municipality makes use of building plans, aerial photography, Deeds Office data, information gleaned during previous inspections and geographical data to determine what a property’s market value is – i.e. what the property would sell for in the open market, by a willing seller to a willing buyer, at the date of valuation.
Property rates are calculated on the market value of a property by multiplying it by a cent amount in the rand, which is determined from the annual budget.
For example: In the case where the market value of a property is R3 million and the cent amount in the Rand is R0.007 (0.7% of a cent), then the amount due for property rates will be R3,000,000 x R0.007 = R21,000 per year (or a monthly amount of R1,750).
When and how to appeal
The issue with municipal valuations is not that they need to happen, but rather that they can lead to increases in monthly rates payable by homeowners based on an inaccurate valuation. If for example a property was bought at R3 million three years prior, but is now deemed to be worth R3.8 million, the homeowner will need to pay in an extra R26,600 per year (an increase of R5,600).
A quick way to establish whether a recent valuation was accurate is to take a look at what similar properties in the same area have sold for.
“A qualified estate agent would certainly be able to assist in terms of assessing a property valuation as we have access to the latest sales data in the respective area. I would certainly recommend that homeowners approach an estate agent if they’re unsure of the municipal valuation of their property”, advises Swain.
He goes on to add that the important thing is to compare apples to apple – the properties compared need to be in the same area, of a similar size and with similar amenities.
Using the example of the R3 million property above, one might find that it’s only increased by R100,000 in three years to R3.1 million – in which case it is the owner’s right to appeal the valuation.
This can be done by filling in and submitting the prescribed form (this is often delivered along with the valuation) as well as any contributing evidence. The objection will then be lodged against the valuation and heard by the Valuation Appeal Board. Should the Board find the objection valid, the valuation will be adjusted accordingly.
Appeal deadlines vary from municipality to municipality but owners usually have a month and a half to two months upon receipt of the valuation estimate to lodge an objection – the cut-off dates will be clearly listed.
“While the process of lodging an objection can be somewhat tedious, it is certainly worth doing so if a homeowner feels that their property has been valued incorrectly and an estate agent will be able to supply the necessary supporting evidence quite easily”, says Swain.
This article “Time To Contest A Municipal Property Valuation?” was issued by Leapfrog Property Group – http://www.leapfrog.co.za/