Real Estate Investor Magazine South Africa February/March 2019 | Page 29
Mashaba has prioritized revenue collection to address
the city’s major infrastructure backlogs. To achieve this the
MMC for Finance, Funzela Ngobeni, has adopted a multi-
disciplinary approach, which appears to include an aggressive
approach to increasing property values during the latest
General Valuation roll. In response, the City received over
50,000 objections from ratepayers. The municipal valuer’s
decisions on these objections are only starting to be processed
and are likely to continue on into 2019. This is clearly creating
annoyance within the rate-paying base and a huge burden on
the City to address each objection.
In response to the public outcry, due to the large increases
in the Johannesburg municipal values in July, ValueCheck was
founded in August 2018 as a result. ValueCheck makes it easy
for rate payers to check if their municipal valuations are market
related and provide assistance if there are grounds for a review
or objection. Although the objection period in Johannesburg
closed in April 2018, residents can still submit information to
the municipality to have their property value reviewed via their
annual supplementary valuation process.
A recent analysis completed by ValueCheck, indicates that
on average the City’s municipal value of residential properties
increased by 35% between the 2012 and 2017 valuation roll
dates. However, over the same period the actual average
market values for residential property in the city only increased
by 23% according to Lightstone’s House Price Index. In an
effort to mitigate this disproportionate increase, the City
increased the exempt property value from R200,000 to
R350,000 and kept the rates tariffs unchanged.
The net result, despite an effort from the City to address
this disproportionate increase, for many property owners is a
very large increase in monthly rates. On average, for owners
of a property valued at R750,000, monthly rates increased
by 12.5%. Meanwhile ratepayers with property valued at
R2,000,000 and R5,000,000 will see increases of 28.8% and
32.7% respectively.
Exacerbating this problem is that in certain suburbs
municipal values have increased much more than the
suburbs market values between the two rolls. ValueCheck
has identified the top 20 mid to high value suburbs which
have been penalized with much higher municipal valuation
increases than market value increases justify.
Based on the actual increase in market value in these
suburbs, rates payers should have experienced an already
punitive increase around 40%. However due to the City’s
aggressive revaluations, actual municipal value increases often
exceeded an eye-watering 60%. For example, rates in Benmore
Gardens and Craighall Park have increased 71% and 66%
respectively. While this may not be a surprise for ratepayers
in higher valued suburbs, property owners in Alexandra East
Bank with a median municipal value of just under R800,000
experienced an average increase in municipal value of above
80%.
On the other hand, some suburbs have benefited from lower
than expected municipal value increases. Property owners in
the following suburbs may feel pleased to be paying relatively
lower rates than market value increases suggest.
This breathing space may be short lived should the City
seek to further increase the revenue it generates from rates
and taxes. The City is permitted under the Municipal Rates
Act to conduct supplementary valuations between the general
valuation rolls, enabling the correction of under-valuations.
This has become a focus for other municipalities which are
under budget pressure.
Valuations in the 2017 Johannesburg General Valuation roll
can still be reviewed by property owners under Section 78 of
the Municipal Property Rates Act even though the objection
period has closed. The focus at ValueCheck is on upcoming
general valuation rolls in Cape Town, Pietermaritzburg and
Polokwane which are to be released in early 2019.
Once the 2019 Valuation Rolls have been completed, the
focus will then focus on other municipalities as their valuations
are updated.
ValueCheck Director, Johan Cloete, a qualified professional
valuer with extensive property valuation experience comments,
“Ratepayers find the municipal rating process confusing and
don’t know how to fix valuation errors. We believe that our
approach will increase the transparency, efficiency in objection
submissions and fairness of the general valuation process for
both rate payers and municipalities.”
SOURCE www.valuecheck.co.za
At no cost, property owners can use ValueCheck’s website to check if their municipal property value is rea-
sonable. Where they think they have grounds for an objection, ValueCheck offers a cost-effective objection
motivation report, with step-by-step guidance on how to apply to correct inaccurate municipal values.
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