The payment of rates and taxes to municipalities have become a critical issue in South Africa with abounding reports of maladministration and corruption. This have caused rate payers to be more involved and critical towards the running of their local municipality.
The Municipal Property Rates Act of 2004 (Act 6 of 2004 As Amended)
Municipalities need revenue in order to supply basic services to all the residents within its borders. One of the sources of revenue is from the rates levied on property as allowed under Section 2 of The Municipal Property Rates Act of 2004 (as amended). In order to levy a rate, the value of each property first needs to be determined and so the Act compels municipalities to do a general valuation of all the properties within the municipal area at least once every four years. These valuations are then compiled into what is known as the General Valuation Roll which forms the basis from which the property tax for each property within the municipal area is calculated.
Why does it seem as if the Municipality have over-valued my property?
The Act allows a municipality to also make use of computer based mass valuation software which enables your local valuation department to value large suburbs with the press of a button. Even though these software can be programmed with multiple valuation parameters it is still impossible to correctly value each and every property within a neighbourhood due to the vast diversity in the sizes, designs, age and accommodation of improvements. For this reason some might feel that their property have been over-valued while some can be of the opinion that their property is in fact under-valued, with the majority feeling that their property have been correctly valued.
What can I do if my property has been over-valued?
The Act compels your municipality to serve you via ordinary mail with a notice of valuation, stating the value of your property and also inviting you to submit an objection by a specified date should you disagree with your valuation. An objection should be submitted on a prescribed form which is available from your local municipal office or from their website. The objection form will provide a space where you can state the reasons for you objection as well as to provide evidence in support of your reasons for objection. Evidence will typically comprise market related sales of other properties in your area which will “proof” that your property, which is similar or even inferior, is therefore over-valued.
Will I be able to embark on the objection process by myself and try to convince them that my property is over-valued?
Sure. However, access to market sales data is in many cases very limited, and even if you have access to said data, you might have difficulties to analysing and applying the data to your property.
How will I benefit by acquiring the services of a professional valuer to assist me in my objection?
For the above reason it might be best to seek the help of a property valuer who normally has access to market data and is experienced in the analysis and application of market data. Furthermore, an objection accompanied by a proper valuation report has a greater chance to be taken serious by the municipal valuer who might be inundated by objections from owners who offer unsubstantiated reasons for why they feel that their property has been over-valued. A property valuer will also be better equipped to advise you whether to appeal the decision of the municipal valuer in the event that your object is rejected and then to present the valuation report of your property at the appeals board hearing.
Will I really benefit from appointing a property valuer?
Well, let’s see what you can potentially save. Say you property’s value is R 1 000 000, but is over-valued by 20% at R 1 200 000. And let’s say that the property rates is calculated at a factor of 0.007154 cent in the Rand. This mean that you will be paying an extra R 5 723.20 over a four year period, excluding the yearly increase in the rates factor! It might however turn out that the property valuer found that your property was in fact correctly or even slightly under-valued. In such a case you will, for a relative small fee, have obtained peace of mind that you are not unnecessary handing over your hard earned money to your local authorities.
...after obtaining a Master of Science degree (MSc) in Property Studies from the University of Cape Town... More