New Property Valuation Roll
Category Kwa Zulu Natal - Ethekwini Rates
The eThekwini Municipality has published its third general valuation roll (GV 2017) since the promulgation of the Local Government: Municipal Property Rates Act, 2004 ("the Rates Act"). Owners have a limited period to examine the roll and to submit any objections to such valuation.
Property rates are a major expense for owners of immovable property and it is essential that owners are satisfied that the value placed on their property by the Municipality is correct, as such value and the associated rates payable thereon will apply for the following 4 year period until 30 June 2021.
The date of valuation has been determined as 2 July 2016 and the new valuation roll reflects the market value of properties that applied at that date, as determined by the Municipality.
It is not only owners that will have an interest in the new valuation roll. Certain tenants may also be affected. Many leases, specifically those for commercial and industrial properties, provide that the tenant is liable to reimburse all property rates to the landlord for the premises leased, or alternatively be liable for all increases in rates on a yearly basis from the commencement date of the lease.
The Rates Act obliges municipalities to undertake a general valuation of properties within their jurisdiction at least once every four years. The first valuation since implementation of the Rates Act was done in 2008 followed by the second in 2012. The Rates Act introduced some important changes in the way municipalities rate properties, including ceasing providing separate values allocated to land and buildings, the introduction of separate rating of sectional title units and the adoption of the principle that the market value is the amount the property would have realised if sold on the date of valuation in the open market by a willing seller to a willing buyer.
The actual rates payable by an owner to the Municipality are not determined solely by the valuation of a property in the valuation roll, but also by a rate randage being a cent amount in the Rand that is then multiplied by the property value, for example: where the market value of a property is R900 000 and the cent amount in the Rand is R0.008 (0.8 of a cent), then the property rates will be R900 000 x R0.008 =R7200 per year being R600 per month. If your property value increases by say 15%, this does not necessarily mean that your rates will increase by the same percentage. The amount of the rate randage or tariff is determined and published each year by the Municipality. Different tariffs apply to different rating categories. The total amount of rates collected each year is part of a budgeting process by the Municipality, and the budget generally increases around the inflation rate each year.
The Municipality does have access to a lot of information relating to properties within its jurisdiction, including deeds office statistics reflecting property transfers with actual sale prices, building plans and details relating to alterations and upgrades to properties, geographic information systems and aerial photography information obtained from previous inspections. Physical inspection of all properties in the Municipality is, of course, not practical, affordable, nor required by the Rates Act, so valuers do apply some averaging in the process.
The GV 2017 rates roll, which will be in effect from 1 July 2017 to 30 June 2021, and which contains some 520 000 entries, is due to be available shortly on the eThekwini Municipality website at http://www.durban.gov.za/Online_Tools/vroll/Pages/default.aspx. It is also available at Sizakala Customer Centres and the Real Estate Offices at 13th floor, 75 Dr Langalibalele Dube Street (Winder Street), Durban. The Municipality will also be obliged to post a “Section 49 Notice” to all property owners, including an extract from the valuation roll containing the relevant information on a property, including description, address, usage, category, extent and market value.
Owners have until 31 March 2017 to examine, and if required, lodge an objection, not only to the new valuation, but to any of the other items in the roll that may not be correct. An owner must complete a standard objection form obtainable from the venues referred to above, or from the website, complete it and submit it with any supporting documents to the same venues or by email to email@example.com.
It is important to note that an objection must be lodged against an entry in the roll and not the valuation roll as a whole. Once an objection has been lodged, it is referred back to the municipal valuer who will review the valuation in the light of all information provided by the objector. The objector will be informed in writing of the outcome of an objection and will have a right to appeal that decision if unhappy with the initial response. If the municipal valuer accepts the objection, an adjustment will be made in the roll, unless the adjustment is more than 10% down or up, in which case the objection must be referred to an appeal board first.
Owners should be careful about submitting frivolous objections that have little substance, as lodging an objection puts a spotlight on the property, and the valuer . an appeal board (if applicable) will re-consider whether a property is actually over or under valued. Having said that, with so many properties on the roll, there are likely to be genuine errors, including values that are obviously not market related. A general valuation is unlikely to be totally complete and accurate, and properties may be accidently omitted from it, only come into existence after the roll is published, have had alterations and additions effected, or be incorrectly categorised. In these instances the Rates Act provides that a municipality must publish a supplementary valuation roll at least once every year for the duration of the general valuation. The eThekwini Municipality GV 2012 roll includes 11 published supplementary rolls with the valuation and owner information updated as at 19 October 2016.
It should be noted that the Rates Act specifically provides that the lodging of an objection or an appeal does not defer a person’s liability for payment of rates beyond the date determined for payment, so owners must continue to pay the rates based on the new roll until there is a final outcome on the objection, and if applicable, the appeal process.
For further information on the GV 2017 valuation roll, including assistance with the objection process, please contact: David Warmback at 031-5757409 or firstname.lastname@example.org.
Author: David Warmback, (Shepstone & Wylie) Head of the Corporate & Commercial department