SOME ISSUES ARISING FROM THE GV 2018 MUNICIPAL VALUATION ROLL
Following the publicity around the Cape Town Municipal Valuation Roll (which we have previously noted contains almost 900 000 properties) with valuations based on July 2018 market values, there have been various interesting developments flowing therefrom. We highlight some of these in our article below. Such issues include the approximately 30 000 objections (as per feedback from the City), the regrettable and apparent unilateral rejection of many of those objections, the subsequent decision by property owners to appeal such responses and issues associated with the property tax.
Bearing in mind that the rating category reflected on the roll determines whether a property is liable for rates on a commercial or residential tariff, clearly the category itself is important as the residential tariff is 50% of the commercial tariff, not to mention the residential rebate of R300 000, off the value before determining the property tax/rates.
We have seen many cases both in our managed portfolio and with external clients where sections in body corporates and other community schemes require reclassification from business/commercial to residential and the cooperation in such cases from the Municipal Valuer and his colleagues has been commendable.
In residential apartment blocks which are functioning body corporates, the garage/parking bay/store room sections should be categorised as residential and thus if yours is incorrect, you are able to apply to the City valuation office for a change in rating category. The proviso is that the ancillary section must be linked to a related residential section (e.g. a garage section must be notarially tied to a flat section).
It is also unclear in some cases whether the Municipal Valuer has included an allowance for 'exclusive use' areas (EUA's) which may be linked to registered sections and this controversial issue is clearly difficult to monitor or resolve as the 'exclusive use' areas in schemes are not as easily identified as the registered sections. We are not advised by the Deeds Office of exclusive use areas. Also, EUA's are never valued and rated in their own right because they are not sections. Section 47 of the MPRA states that only sections must be valued. When you buy a section (say an apartment) you often buy an EUA (say a garden) as part of the transaction. The price you pay for the apartment therefore implicitly includes the garden. Since these sales are used to value sections, EUA's are therefore also implicitly valued.
A further factor to consider is that in residential body corporates, where registered sections belong to the body corporate and are therefore used as utility rooms the Municipal Valuer is able to value such sections at a nominal R1 000, together with a common property (SO3) use code.
That will result in no property tax being charged to the body corporate.
In addition, the City's rates policy allows that municipal values below R50 000 do not attract property tax and thus owners of such sections should not be billed/charged.
Owners affected in this way are able to apply to the City and specifically to the revenue section, for relief: NkosiyetuChris.Nkonyana@capetown.gov.za
As always, where you have valuation enquiries or wish to verify the accuracy of an individual municipal valuation, you are more than welcome to make contact with us at the following email addresses:
Author: John van der Spuy