With new valuation comes new property rates Photo Housing
Johannesburg – In life two things are certain, taxes and death. The City of Joburg has determined a new value for 934 652 properties in the metro area. Property owners rates will be based on these valuations from July 2023. The Organisation Undoing Tax Abuse (OUTA) has encouraged all ratepayers to check these new valuations are reasonable to avoid paying excessive rates.
The 2023 general valuation roll is available at the city’s offices as well as online. Property owners have until 31 March to review the newly proposed valuation and object to it. In order to know if it is reasonable or not, one needs to know the market value of the area. Something not every layman knows, said Chantelle Gladwin-Wood, Attorney (Partner), Notary and Conveyancer at Schindlers Attorneys.
“We usually advise our clients to either seek out the experienced assistance of sworn valuers if it’s a high value property or a business property. If it’s a normal residential property you can seek out the assistance of estate agents in your area which can give you an idea of what the property could sell for.”
This valuation will be used from 1 July and will last for the next five to six years. Therefore, it is important to make sure the valuation is right.
How the city determines the valuation
The City determines the values of one’s property based on a market-related “willing seller to willing buyer” which came into effect as of 1 July 2022. The rates are charged at a rate-in-the-rand based on valuations. A person can purchase a property for more than its value, for whatever reasons and they don’t need to fear of the price impacting the valuation of the house. Such purchases should be viewed as an outlier and should not impact the valuation price, explained Gladwin-Wood.
“This would not be a normal arm’s length transaction which is what determines market value. Let’s just say you buying it from your mom and you wanted to give her some extra money because she doesn’t have a pension. That’s not an arm’s length transaction that shouldn’t be utilised by the municipal valuer as one of the comparative sales that they will use when they look at what the market value is generally in a particular area.”
While there might be those who think having a higher property value will be beneficial in some way, Gladwin-Wood assured that it is not. It might end up with you getting rejected for a loan or you may end up in hot water with the law.
“People do utilise the value of their property for different purposes. Primarily there is money on a bond and here you do want your property to be as high as possible so that you’ve got equity in whatever business transaction you’re dealing with. For the municipal purposes, you don’t want your property to be overstated because then you are going to pay additional rates and taxes. If your property is only worth a million rand then when you tell the bank it’s R2 million, someone’s probably going to ask questions and you may get into some trouble or have your loans declined and be accused of fraud.”
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Objecting to the valuation and the evidence that you need
If you find that your property is being overvalued by the municipality, you can object to it. On the city’s site you can find the form and fill it out online or download and deliver it to the city by the March 31 deadline. However, you may have to wait quite a while before you get a final decision, said Gladwin-Wood.
“They will then give you an objection number. Now that unique objection number is kind of like your ticket for having lodged your objection. The average waiting time is somewhere around a year to 18 months but the city has said that they’re going to try and expedite these outcomes.”
What one needs to keep in mind is that the form must be presented with evidence. If you decide to fill a form with no evidence to back up your claims, it will be rejected. There’s a few ways to get the evidence that you need to counter the one the city has, explained Gladwin-Wood.
“If the property is of a value of less than R3 million or R4 million, it’s likely that you’re going to spend more money paying for a professional valuer to come out and value your property. They cost roughly R4500 or R5500 per property. When you’re looking at properties in that range, it’s normally not financially feasible to pay someone to do a sworn valuation for you. However, that is the best evidence that you could possibly get.”
Gladwin-Wood recommends a professional valuer for all high value objections such as business properties. There are other cheaper options for those who can’t afford a professional valuer or if their property isn’t as high of a value.
“If you are not able to afford a sworn valuation, you can ask estate agents in your area. We would advise you to ask more than one. So at least two or even three so that you can utilise an average which is obtained from the evidence. Also the more values you have, the stronger your evidence. You can also use bank valuation. So where evaluators have gone out and done valuations of your house for your bond or your building bond or whatever the case is.”
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Missing your valuation objection and the consequences
It is extremely important to ensure you meet the deadline for the objection. Gladwin-Wood warned that missing it will cause you more troubles than it is worth. It is not guaranteed you will get an opportunity to object to the valuation and even if you do, it can be an extremely long process.
“It is hypothetically possible in certain limited circumstances that you will be given another opportunity to object over the next couple of years but it is not guaranteed. It’s a relatively complex thing for us lawyers to go and fight fights when people have missed their original objection window. It’s not easy and it takes a long time.”
It is important to also check that your property falls under the correct categorisation. If your house is categorised under business, your “property rates are going to be 2.6 to 6 times more expensive,” said Gladwin-Wood.
As the deadline approaches, it is important for all property owners to make sure the valuation is correct. As Gladwin-Wood said, there is no benefit to having a high valuation because one will just end up paying higher property tax rates.
To hear what Chantelle Gladwin-Wood believes can also impact your valuation, you can listen to the discussion here
