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Help, my property valuation has quadrupled!

Act requires owner to pay now, resolve later.

The Joseph family from Johannesburg could be spending all the rental income from their two buildings in Louis Botha Avenue on property rates over the next five years and still have to pay in from other sources.

This follows after the valuations for the buildings were drastically increased in the latest City of Joburg general valuation roll published on February 20 this year.

According to Bronson Joseph the valuation for the building at 620 Louis Botha Avenue, Bramley, with mostly commercial and a few residential tenants, has increased from R7 million to R43 million.

In the previous round of valuations the building was initially valued at R15 million. After an objection it was lowered to R11 million, and on appeal this was eventually set at R7 million.

“We’ve been having problems with out valuations for the last ten to 15 years,” Joseph says.

The family’s other building at 438 Louis Botha Avenue, with mostly residential and a few commercial tenants, was previously valued at R5 million. It has now been increased to R20 million.

“This is going to cripple us,” Joseph says. He believes the valuations are far off the mark and should in fact have decreased in line with the deterioration over the last two years of the area in which they are situated.

He has already taken steps to object to the new valuations, but realises that the Municipal Property Rates Act requires owners to pay the increased rates bill based on the new valuation until the objection has been finalised.

And that could take a very long time.

Director of valuations at Rates Watch Ben Espach says the new valuations are obviously wrong and questions why the municipal valuer failed to consider the history, particularly of the first building.

He confirms that the owners will have to pay rates based on the inflated valuations from July 1, in accordance with the Act. If they don’t, their electricity will be disconnected.

They can approach the council to stop credit control until the dispute has been resolved, but if granted that will only be valid for a month whereafter they have to reapply. This is only allowed for three consecutive months, while finalising the objection may take up to 18 months.

In the meantime the owner has to continue paying the increased amount. “This can result in the closure of a business,” Espach says.

Espach says all properties in Johannesburg have been revalued, totalling almost 900 000. The new values were published on the City’s website on February 20 this year and owners can submit objections to their new valuations until April 6.

Owners can search their property’s valuation here and also lodge objections electronically via the website.

Espach says from what Rates Watch has seen so far, the valuations are a mixed bag. Some are almost unchanged, while others like the valuations of the Joseph family’s buildings have doubled or more. Some have been decreased.

It does however seem as if residential properties have been valued quite aggressively, especially in the higher price range, Espach says.

He says it is important that owners realise that the valuation is based on the market value of the property on July 1, 2017. “It is actually a snap shot of the market on that date.”

He cautions that valuations that have doubled are not necessarily wrong, since the previous valuation might have been too low. The pertinent question is what the market value was on July 1 last year.

Sandton City’s valuation has for example doubled from R5 billion to R10 billion, but one would have to do an in-depth analysis based on the rental income to determine whether the new valuation is correct, he says.

Another Rates Watch client has seen the valuation of his house in Sandringham increase from R5.7 million to R10 million. The new valuation is however correct since the previous one was too low.

Such a big increase however warrants proper investigation, Espach says.

Objections should be based on market value at the valuation date.

Owners of residential properties should include information of comparative sales in the same area and for commercial and industrial buildings information about market related rental income should be included.

An office block in Ferndale has been valued at R140 million now, instead of R70 million. He says the new valuation clearly does not take into account the deterioration of the market from an income of up to R75/m2 in 2012 to the current R55/m2.

Market-related rental income Espach cautions, is not necessarily the same as real income. Older leases with relatively high escalation clauses could result in rental income above market value, he says.

Owners should also check the categorisation of their property on the valuation roll, Espach says. Each category, for example residential or business, is rated at a different tariff and a residential property billed at a business rate could for example be overcharged substantially.

Owners who are unhappy with the outcome of their objections have a further opportunity to appeal and can take the result of the appeal on review in the High Court if they are still unsatisfie

Espach warns that owners who do not object to their property valuations before the closing date could be bound to them for the next five years, until the next general valuation.

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Why is property valuation for the council such a guessing game? Nothing beats a more scientific and on the ground approach – like visiting the property.

They should just do valuations in-house and not outsource valuations to a bunch of underequipped empowerment candidates who just use estimation techniques to cover whole areas.

You cannot in all seriousness not visit a property that is being valued and they do not visit 1/100th of the properties.

Unrealist property valuations and rates and unrealistic tax increases just force the law abiding citizen to go underground and eventually bow out. This is how an economy splinters and countries become sh…hole African countries ( to coin a phrase)
Yet another case of killing the goose that lays the golden egg.

The property laws in South Africa are just counter intutive and will discourage investment. Buying a property has become such an expensive affair with all the fees. A R2mil property costs R150k just in fees. This is ridiculous.

This is tyical DA thievery.

They did it in Cape Town, now applying it to wherever they are voted in.

Fortunately people are cottoning onto this (and their gross mismanagement and corruption in Cape Town) and they are going to crater at the polls in 2019.

Certainly true. One would think that the DA would have learned from the disgruntled Capetonians regarding excess charges and city managers awarding themselves huge salary increases. I suspect the DA will feel the pinch in 2019 at the rate they going.

Amazing, you have the gall to mention ‘gross mismanagement’ and ‘corruption’ without including ‘ANC’ in the same sentence…you sound more and more like a rogue bell pottinger bot…

Truth hurts, eh BD?

View of a Practising Attorney in Cape Town:

I do not necessarily agree that the Act requires rates to be paid at the inflated valuation from 1 July while an objection or appeal is pending. Sections 50(6) and 54(4) only say that a person’s liability for payment of rates is not deferred while an objection or appeal is pending. That to me means that the person may simply not stop paying rates completely. For your information my interpretation is supported by the current practice of the City of Cape Town. I am in possession of an official circular put out by the City of Cape Town in connection with its 2015 General Valuation. It poses the following question: “Do I still need to pay the new rates if I am in disagreement with the value and my objection is still unresolved?” It then supplies the following answer: “You will need to pay rates until the objection is resolved. The rates need not be based on the new valuation but must at least resemble the amount you are currently paying . . . “. Definitely worth a court challenge.

Have to put in an objection for one of my properties, it nearly trippled from what I bought it for about 2 years ago. Would love that to be true but no ways I could get that in the current market, I’d be surprised if I got 10% more.

This is nationalisation by stealth by, of all parties, a DA run council. We were far better off under an ANC run city. If the DA doesn’t think this will come back to bite them in the next elections they are in for a rude surprise.

What is the rental yield at the new valuation versus the old valuation?

Nope, it has not quadrupled.

It is now worth NIL.

— Luv to see how our ‘esteemed’ CA(SA)s are going to deal with this in the accounts. Obviously ALL assets of a physical and investment nature have to be impaired immediately or at the very least are now ( as at 27th February 2018 )contingent liabilities.

— Come on SAICA you surely must by now have an answer to this.

Anc and all but 1 black party has today instituted parliamentary action to expropriate your land WITHOUT COMPENSATION.

Get out of SA as fast as you practically can.

If you did not before listen to the parliamentary debate earlier today.

The BLOODLUST was palpable. Any education and decency that our people may have garnered through ducation was thrown out of the window.

FLEE SA if you can.

Agree with the comments regarding the thieving DA council. Value on my property increased over 50%, if I could realize the fantasy value they ascribe, I’d sell tomorrow and leave this sinking ship. People, myself included, complained bitterly about the incompetent ANC council, but based on my experiences of the current DA council, I personally do not see any difference between the 2. I think the DA is going to get a big surprise, come the next elections. Know of an entire household of 4 that WILL NOT VOTE DA in JHB again.

I really don’t think voting for anyone other than the DA, the best of a bad lot, will help you. Truth is, with all the free stuff (all services and houses etc) for people who pay no fees at all, and all city income static or even shrinking (think water in CT), cities and towns simply cannot balance their budgets at all. This may well just be the tip of a very ugly iceberg.

Stupid logic of a typical DA supporter….”DA, the best of a bad lot”….just as idiotic as the tired old mantra of “Cape Town, the Best Run City in SA, and lest we not forget, “This well-run city will NOT run out of water”…

The DA are NOT going to get a free pass for their stuff-ups, and there have been plenty.

The DA is not the only alternative to the ANC.

Cape Town about to be the first major city in the world to run out of ater, and these DA clowns all voted to charge the ratepayers a “drought (cough cough) levy to fill their revenue gap to pay their own fatcat bonuses and salaries…

Only when civil society, including Outa, threatened protests and lawsuits did the DA back down (and blamed de Lille) for their idiot idea.

In Johannesburg the DA need to fix 20 years of doing minimal maintenance. Problem is that our values have gone up because ratepayers are funding private security initiatives. So we pay twice and the city cashes in on our efforts.

How tiresome your emotional rants are, can’t you just go somewhere else, don’t care where, but not here…

Only way to stop this is to allow the municipality which has found such a high value to get first preference to buy the property. I will even give them a 10% cash discount…..

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