The Municipal Property Rates Act
What is the Municipal Property Rates Act?
The Municipal Property Rates Act is national legislation that empowers municipalities to raise rates. Its purpose is to provide nationwide uniformity, simplicity and certainty as well as to take into account historical imbalances and the rates burden on the poor.
What is the basis of property valuation under the Municipal Property Rates Act?
Property is valued at market value, which is the amount that the property would have realised if it was sold on the date of valuation in the open market by a willing seller to a willing buyer.
What is meant by the date of valuation?
This is a date set by the municipality to which all values relate. The values must reflect the market value of the properties in accordance with the market conditions which applied at that date.
The date of valuation of the General Valuation 2008 (upon which rates will continue to be raised until 30 June 2012) is 1 July, 2007. The General Valuation 2012 has a date of valuation of 1 July, 2011, and rates will be raised on this Roll from 1 July, 2012.
What happens when the market changes?
The Act provides that the municipality must set a new date and re-value all properties at least once in every four years.
Why are rates charged?
Municipalities need a reliable source of revenue to provide basic services and perform their functions. Revenue from property rates is used to fund services that benefit the community as a whole. These include the construction and maintenance of streets, sidewalks, street lighting and storm drainage facilities; the building and operation of clinics, parks, recreational facilities, cemeteries, beaches and libraries; as well as the administration of the municipality.
Who pays rates?
Rates are paid by all owners of property, even government.
How are rates calculated?
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 R800 000 and the cent amount in the Rand is R0.009 (0.9 of a cent), then the amount due for property rates will be R800 000 x R0.009 = R7 200 per year. This means that every month the property owner will pay R600.
Will my rates go up when there is a re-valuation?
The total amount of rates collected each year is a budget-balancing figure that currently comprises a significant percentage of the total municipal budget. The amount that each property owner pays is determined by the value of his property in relation to the other properties in the municipal area. If all properties show the same change from the old values to the new, then all would reflect a similar rates change.
The reality however is that the various types of property in the various parts of the municipality show different changes in value and thus will have different rates changes. The specific effect on an individual property will obviously only be known once the budget process is complete and the new rate randages are applied to the new valuation roll.
How and when do I pay rates?
Rates are paid monthly. You can make payment at any one of the cash halls/municipal offices or at EASYPAY pay points, via direct debit or on the Internet. If you do not receive an account then you, as a property owner, must request one.
My property hasn’t sold in 20 years, how will it be valued?
By reference to similar properties in the neighbourhood that have recently been sold.
What criteria are used to assess property values?
Market valuations are based on transactions between willing buyers and willing sellers and the factors that influence these transactions.
Are different finishes such as tiles and fitted kitchens taken into account in the valuation?
There are many factors which influence the value of a property and these can broadly be broken down into location, size of property, extent and type of buildings, quality and condition.
Any exercise involving data-collection should always take cognisance of the ability to maintain the integrity of this information. There would be little point in collecting information on those aspects of a property that may be legally changed by the owner without the necessity of having to submit building plans and thus alert the municipality to these changes.
Are all properties going to be inspected for the re-valuation?
Physical inspection of all properties is neither feasible or affordable, nor is it required in terms of the law, but is undertaken where considered necessary by the valuer in order to check information already to hand.
Municipalities have access to a vast database of property information including building plans, Deeds Office data, geographic information systems, aerial photography and information obtained from previous inspections. This information is maintained continuously and inspections are routinely carried out where alterations, authorised and unauthorised, are made to properties.
Sectional title properties
How are properties held under sectional title treated?
In terms of the Municipal Property Rates Act each registered sectional title unit is separately valued and a separate rates account sent to each individual registered owner.
How is the common property in sectional title schemes valued?
By definition, a sectional title unit is a section together with its undivided share in the common property. Common property therefore does not have a separate value in the market place; its value is inherent in the value of each unit.
How is account taken of differences between the various units in a scheme?
Individual units in sectional title schemes are valued at what they would sell for on the open market. Valuers do not create value but interpret the market by analysing sales and, thus, if sales show that there are price differences between various units within the same scheme because of size, view or other reason, then such differences will be taken into account when valuing the various units
Notification of valuation
When will the new Roll be released?
The Roll is being released in February, 2012.
How will I know what my new value is?
A notice will be posted to each registered property owner informing him of the value that has been assessed in respect of his property.
Where can I find out what other properties have been valued at?
up-to-date property value estimates;
last sale dates; and
prices of comparable sales.
Objections and appeals
What should I do if I am unhappy with the valuation?
Should you feel that your property has been over- or under-valued, or incorrectly categorised, you may lodge an objection.
How do I lodge an objection?
You can do this by completing and handing in the prescribed form together with any information you have in support of your objection. Please check with your local municipality for availability of forms.
What happens after I have lodged an objection?
The matter is referred back to the municipal valuer, who will review the valuation in the light of any additional nformation provided by you. You will be informed in writing of the outcome of this review.
What happens if I am still unhappy with my valuation?
You may lodge an appeal against the valuation and this appeal will be heard by the Valuation Appeal Board, which is a tribunal appointed by the provincial government.
How do I lodge an appeal?
Details of this will be provided to you by your local municipality, together with the outcome of your objection
Supplementary valuation rolls
Why is there a supplementary roll?
The municipality must regularly, but at least once a year, update its valuation roll. Where changes do not affect value, such as a change in ownership, the roll may simply be amended. Where changes comprise a change in value or the addition of a property to the roll, a supplementary roll must be prepared and published.
What sort of event will cause a property to appear in a supplementary roll?
In circumstances where a property:
was incorrectly omitted from the roll;
was included in the municipality after the last general valuation;
has been subdivided or consolidated;
has increased or decreased in value owing to additions, alterations and/or demolitions;
was incorrectly valued during the last general valuation; or
was incorrectly categorised during the last general valuation.
What is the purpose of the supplementary roll?
To give people the opportunity to object to the values assessed in respect of the changed or added properties.
How will I know if my property appears in a supplementary roll?
A notice will be posted to each registered property owner whose property appears in a supplementary roll, informing him of the value which has been assessed in respect of the property.
The values in the supplementary roll are carried out at a later date to those in the main roll, is this not unfair if the property market has risen or dropped?
The date of valuation for any supplementary roll to the General Valuation 2008 is 1 July, 2007. This is the same date as the main roll and all valuations are indexed to this date. Supplementary rolls to the General Valuation 2012 will have a date of valuation of 1 July, 2011.
Information provided by Shepstone & Wylie Attorneys
Additional information for ratepayers is available - but please note that the objection and appeal timeframes for some metros have already expired.