Should You Contest a Municipal Property Valuation?

Property rates will be going up for many home owners in Cape Town as the local municipality recently released the latest valuation roll. This at a time when electricity will soon be increasing and the interest rate keeps climbing. What many of these owners might not realise though is that these valuations can be appealed against.  

The Municipal Property Rates Act is national legislation that empowers municipalities to raise rates for the purpose of funding the local municipal budget. These valuations have to be conducted at a minimum period of every four years though the City of Cape Town, for example, conducts a valuation every three years, ostensibly to lessen the impact of value changes on home owners.                          

“The general valuation is a certainly a necessary tool, but at the end of the day a property valuation is just that – an assessment of what a home is worth and it is open to debate”, says Bruce Swain, MD of Leapfrog Property Group.

How the valuation is conducted

The municipality makes use of building plans, aerial photography, Deeds Office data, information gleaned during previous inspections and geographical data to determine what a property’s market value is – i.e. what the property would sell for in the open market, by a willing seller to a willing buyer, at the date of valuation.
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 R3 million and the cent amount in the Rand is R0.007 (0.7% of a cent), then the amount due for property rates will be R3,000,000 x R0.007 = R21,000 per year (or a monthly amount of R1,750).

When and how to appeal

The issue with municipal valuations is not that they need to happen, but rather that they can lead to increases in monthly rates payable by home owners based on an inaccurate valuation. If for example a property was bought at R3 million three years prior, but is now deemed to be worth R3.8 million the home owner will need to pay in an extra R26,600 per year (an increase of R5,600).

A quick way to establish whether a recent valuation was accurate is to take a look at what similar properties in the same area have sold for. “A qualified estate agent would certainly be able to assist in terms of assessing a property valuation as we have access to the latest sales data in the respective area. I would certainly recommend that home owners approach an estate agent if they’re unsure of the municipal valuation of their property”, advises Swain.

He goes on to add that the important thing is to compare apples to apple – the properties compared need to be in the same area, of a similar size and with similar amenities.

Using the example of the R3 million property above, one might find that it’s only increased by R100 000 in three years to R3.1 million – in which case it is the owner’s right to appeal the valuation. This can be done by filling in and submitting the prescribed form (this is often delivered along with the valuation) as well as any contributing evidence. The objection will then be lodged against the valuation and heard by the Valuation Appeal Board. Should the Board find the objection valid, the valuation will be adjusted accordingly. Appeal deadlines vary from municipality to municipality but owners usually have a month and a half to two months upon receipt of the valuation estimate to lodge an objection – the cut off dates will be clearly listed.

“While the process of lodging an objection can be somewhat tedious, it is certainly worth doing so if a home owner feels that their property has been valued incorrectly and an estate agent will be able to supply the necessary supporting evidence quite easily”, says Swain. 

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us