SAIV encourages property owners to understand the municipal valuation process, rates and taxes
The South African Institute of Valuers (SAIV) would like to encourage property owners to have a better understanding of the municipal valuation process and its effect on rates and taxes payable. Natalie Ginsberg, Vice President of the SAIV says that it is important for the general public to have a better understanding of their rights and responsibilities as property owners in South Africa. “The SAIV values the role of education in our industry and in our country as a whole. It is important to share helpful information and to aid in a greater understanding of the nuances of property valuations and the related rates and taxes consequences.”
“Many property owners aren’t aware that the rate in the Rand impacts their rates and taxes paid, and in turn the overall municipal bill.” Ginsberg explains: “The rate in the Rand and the municipal value of your property determines the rates and taxes payable on an annual basis. This is calculated by multiplying the centsin the Rand (rate in the rand) by your property’s municipal value. The rate in the Rand is dependent on the municipal category of your property, in accordance with the Rates Policy, which includes residential, business, vacant land etc.” The rate in the Rand is adjusted annually in July, dependant on the City’s budget. By way of example, based on the published City of Cape Town budget, rates and taxes will increase by 4.51% across the board on 1 July 2021. Although South Africans are struggling through tough economic times, at the same time, this municipal income is vital for the continued operations of South Africa’s municipalities. The City spends its revenue on things such as transport and traffic services, repairs and maintenance to infrastructure and facilities, fire and emergency services, parks, sport and recreation, library services, security in the form of Metropolitan Services and law enforcement.
Ginsberg explains further that the municipal valuation has just as much of an impact on the rates and taxes paid. According to the Municipal Property Rates Act (Act 6 of 2004) (“Act”), every municipality must produce a General Valuation Roll at least once every four years, with the exact intervals differing between municipalities. A General Valuation Roll is a document containing the municipal valuations of all registered properties within the boundaries of the City, valued at a certain date and implemented with effect from July the following year. The valuation roll also contains supplementary valuations which may be conducted in accordance with Section 78 of the Act.
“If the municipal valuation is not in line with the market value as at the date of valuation, you will have an opportunity to lodge an objection. The objection is then assessed based on the value of the property on the date of valuation and a notice of decision is sent. If you are not happy with the decision of the municipal valuer, you can appeal the decision. The appeal is heard by the Valuation Appeal Board – a body that is independent of the municipality. It is important to bear in mind that the unaffordability of the actual rates and taxes is not a reason to object against the valuation,” advises Ginsberg.
Ginsberg warns that property owners must be prepared to prove their case when objecting or appealing any decision, and that a letter from a real estate agent is not often sufficient. Seeking the help of a registered professional valuer will carry more weight.
“It is recommended that property owners keep track of their property, the improvements they have made, expenses incurred, and tenancies as at July (the year prior to publishing of the General Valuation Roll). They should keep records and photographs, too.” Any improvements done after the date of valuation should also be noted to depict the condition of the improvements. The municipal valuer will only, in all likelihood, inspect the property at the appeal stage, which could be months or even a year or two down the line.