Property Rates - Is your Valuation Fair?

Private Property South Africa
Julia Hinton

Many concerned property owners are asking the question, "What's going to happen

to our property rates in 2008?"

Since the last municipal valuations were done in 2001 and the subsequent boom

years that saw huge hikes in property values, many property owners are worried

that their rates will increase dramatically under the new system.

The date for implementation of the new Rates Policy and general valuations roll

proposed by the Local Government Municipal Property Rates Act, 6 of 2004 is 1

July 2008. The Act aims to create a uniform policy for municipalities in

regulating property rates across the country.

Changes to property rates

In many parts of the country including Johannesburg, rates have been based on

the value of the land only, and a standard assessment rate was applied to all

types of property. Also rates on sectional title property have been levied

against the body corporate of the unit and not the individual unit owner

The new Act will see two key changes in the way property rates are set. Firstly,

rates under the new system will be levied on the market value of the property,

the land value and the improvements. Secondly, sectional title owners will now

be assessed and billed individually for their rates.

The Act stipulates that properties be grouped in categories that are based on

the zoning, actual use or geographical area. Different assessment rates will be

levied against the different categories.

How to check if the new valuation is fair?

Graham Ewing of Graham Barclay Ewing & Associates Property Valuers says that if

you're worried about the new municipal valuation on your property being too

high, then you should get a 'valuation validation'. A validation can be obtained

confirming the correctness of the municipal valuation on your property.

The Act defines the market value as the realistic price of a property in the

open market between a willing buyer and a willing seller. Therefore, take the

example of a home purchased for R1.9 million, but the new municipal valuation

reflects a valuation of R3.5 million. The owner would clearly have grounds for

an objection, and in this case, could stand to get a reduction in rates of

around 30%.

While Cape Town has already completed the valuation roll and had its public

inspection period, Johannesburg ratepayers will be able to inspect the Roll in

February 2008. The Act stipulates that city and town councils must give property

owners at least 30 days from the time the completed valuation roll is published,

to check the fairness of their new valuation. During this period, ratepayers

will have the opportunity to lodge an objection in the event that they do not

agree with the new municipal valuation.

Johannesburg homeowners will be able to check the Roll on, in

hard copy at the municipal offices or by calling the Customer Service Centre on

011 375 5555 for assistance in looking up the value of their property. There is

also a calculator on the website to help people calculate the estimated rates

due on their property.

People living in other cities and towns who are concerned should similarly call

their local municipal offices to find out what the new valuation on their

property is, and whether there is still time to object or not.

What if your rates account is unaffordable or unnecessarily high?

If you are unhappy with the new municipal valuation on your property and the

validation indicates you have good grounds for an objection, you may lodge your

objection with the municipal manager by completing the relevant objection form.

Each year the town or city council works out a budget and the rates tariff is

then determined known as 'the cent in the rand', which is calculated to cover

the likely costs of providing services, and is not for profit.

Objection forms will be available at customer service centres or on the various

local government websites and need to completed and handed in. Objections will

be considered and you will be advised of the findings. If you do not agree with

the outcome, you can then appeal to the Valuation Appeal Board, an independent

board appointed by local government.

"Take the Objection form to the local municipal office and make sure you get two

copies date stamped and signed," advises Ewing. "There could be a cost to having

your property re-inspected, but it is a small amount, and shouldn't deter any

genuinely concerned ratepayer."

Objections must be lodged within the period stipulated by the local government.

Sectional title schemes and unit owners

Property rates are currently levied against the land value of the sectional

title complex and the body corporate is responsible for payment. Sectional title

owners might be in for a bit of a shock, so if you own a sectional title

property, it would be wise to do some research.

"Owners could pay between 100-400% more in assessment rates over and above what

body corporates have been paying on their behalf," says Ewing. "This is the

result of the need to achieve parity between freehold and sectional title

properties in terms of the new Act."

Under the new system, sectional title owners will be sent separate accounts and

each unit in the complex will need to be valued individually in addition to the

proportionate share of common property.

Ewing says that his company can assist with valuation validations for sectional

title schemes and advise owners on how to proceed in the event that they feel

their rates will be too high or unaffordable. He adds that he does expect some

additional reduction for sectional title owners, but at this stage it is unclear

what this will constitute.

Professional advice

The services of an independent registered valuer could help property owners

enormously in understanding the new rates system, and in particular, in lodging

objections before the various municipal appeals boards. Alternatively,

homeowners can contact their local municipal offices for advice and assistance.

Useful Contact Info


Tel: 011 375 5555



Tel: 031 3624111


Cape Town

Tel: 086 010 3089


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