Opinion Editorial – Municipal rates based on valuations

Opinion Editorial – Municipal rates based on valuations

Adrian Goslett; Regional Director & CEO RE/MAX of Southern Africa

Do you know how much your property is really worth? And do you have a good idea of the rates you should be paying on it?

Municipal rates are one of the most important of all local government taxes, and essential to the efficient functioning of your city or town, not to mention maintenance of the quality of your environment.

Every one of us who owns a property is required to pay rates, and rightly so. But because not all properties are created equal, each has to be rated separately in order to determine a realistic, market-related value – and therefore, an equitable rates amount to be levied on the owner.

The City of Cape Town is currently undertaking just such an exercise on the 780 000 rateable properties within its boundaries, pegged at a value as of 1 July 2009. But according to recent media reports, there are already problems with the preliminary values it has attached to many properties.

This is hardly surprising, given the sheer scale of the project; inevitably there will be inaccuracies and misperceptions about individual properties’ value. Indeed, the City may be in possession of outdated information relating to a property, and it has also lamented the fact that it cannot obtain daytime access to many homes because of the unavailability of owners.

But the current valuation process is also problematic because property values have, in the past 18 months, depreciated significantly. According to the latest Absa house price index, the prices of small homes declined in real terms by 6.6% year-on-year in December, medium homes by 6.9%, and large homes by 3.7%.

Granted, property values have increased nominally in the past few months, but not so much as to be significant at all. Therefore, rates valuation amounts should be substantially lower than they were in 2008 – which means that many people could ultimately end up paying lower rates than they are at present, once the new rates are imposed.

The City of Cape Town, in an effort at transparency, has made its preliminary assessments of individual property values available on its website for home-owners to inspect. It has also posted the assessments and an indicative “cents in the rand” rates amount to home-owners, to help them prepare for the rates they will have to begin paying in the second half of this year.

Capetonians have two months, as of 22 February, in which to challenge the municipal valuation of their property. After this period, says the City, objections will not be entertained. It is also making the objections process easy, with 18 rates evaluation inspection centres during the objection period, as well as a call centre.

This is fair enough: it is plentiful time in which to have one’s say about the worth of one’s property, and the City must complete its roll of valuations for implementation on the target date of 1 July 2010. While we should have the right to challenge the taxes imposed on us, the authorities should also be able to collect them efficiently and effectively.

This process is certainly laudable, and shows that there is a will on the City’s part to attain a fair and equitable rates valuation for each property. But this does not necessarily mean that this goal will be achieved on a large scale, particularly given the dip in property values in the recent past, and property owners should be wary of simply accepting the accuracy of the municipality’s assessment at face value.

My advice to home-owners is this: do your homework, and ensure that you are getting a fair deal from your council. It’s not that difficult to do: simply get a credible estate agent – or better still, a certified property valuer – to visit your home and provide you with all the correct information you need to determine a fair property value and rateable amount. Cross-check this, too, with recent property sales in your area.

Obtaining an independent, accurate and up-to-date valuation for your property may take a little sweat and cost you a few rands, and if it confirms the municipal estimate, then you have a good idea of how much your most important asset is worth, and you have peace of mind that you are not being overcharged.

But if it indicates that you have grounds to challenge the municipality’s estimate, it could save you thousands in rates payments. And that is money that you could use to even greater benefit, such as paying off your bond more quickly and saving you even more thousands in mortgage interest payments to your bank.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 23 Jan 2018
      Many people only start thinking about home-ownership when they are ready to “settle down” or start a family, which is why first-time buyers these days are generally in their mid-30s, compared to those in the previous generation who were usually in their mid-20s.
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us