Real Estate Investor Magazine South Africa March/April 2019

VALUATIONS Cape Town Municipal Valuations to be released shortly WHICH SUBURBS AND ESTATES CAN EXPECT THE HIGHEST INCREASES BY ANDREW WATT T he Cape Town Municipality is planning to release its latest General Valuation roll on 21 for calculating the new property rates that property owners will be charged from July 2019. The City conducted valuations during 2018 and the resulting municipal values will replace those cur- rently in use which were last calculated in 2015. Once the roll is released, property owners will have the opportunity to object to their revaluation if they think their municipal valuation is too high. Objections can be made in person until 29 March or online until 30 April. This is important because the impact of a large increase in property rates could be the straw that breaks the camel’s back for Cape Town property owners already enduring significant increases in electricity and water prices, recent increases in VAT and personal tax rates and record fuel prices. ValueCheck, a new online property valuation service, provides Cape Town property owners access to a free service to check if their municipal property valuations are correct. If the owner thinks that their valuation is too high, ValueCheck provides further low-cost information and tools to assist the property owner to object to their municipal valuation. According to the Municipal Property Rates Act, municipal valuations should reflect the market value of a property at the time the valuation roll is conducted. With Cape Town having experienced a mini-boom in property prices between 2015 and 2018, Lightstone Property reports that for most areas, market values have increased between 20% and 40% depending on location. However, the recent experience of DA-controlled Johannesburg Municipality serves as a warning to Cape Town residents about the importance of carefully monitoring 26 MARCH/APRIL 2019 SA Real Estate Investor Magazine municipal property values. In its latest General Valuation roll update released last year, Johannesburg aggressively increased its municipal property values by around 35% while market values only increased by 23% over the same period. This resulted in increases in property rates above 30% for properties valued above R2m. In many higher valued suburbs, the experience was even worse with rates increasing by over 60%, leading Mayor Herman Mashaba to announce record municipal income shortly after the new rates came into effect. To prepare Cape Town property owners for the upcoming General Valuation roll, ValueCheck has released statistics predicting the municipal property value increases for owners in different suburbs and gated estates. A summary of these statistics is provided below while the full list of suburb and gated estate increases can be found at www.valuecheck.co.za. Suburbs where municipal increases most likely to exceed market value increases: ValueCheck predicts that a number of suburbs and estates are braced to experience much higher municipal value increases than market value increases. This is driven partly by good property price performance in these suburbs but more importantly possible municipal undervaluations during the previous 2015 valuation roll. Below are the top 20 suburbs and gated estates where ValueCheck expects municipal property value increases to exceed the actual property price performance between the 2015 and 2018 valuation rolls. Many of these suburbs and estates have seen significant development between 2015 and 2018 so the increase in municipal value is not surprising. However, this makes it even more important to query the municipal value since values in

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