Updates: Details

Market values of homes will be reviewed every FOUR Years What is the basis of property valuation under the Municipal Property Rates Act? Property must be valued at market value, which is the amount the property would have realized if sold on the date of valuation in the open market by a willing seller to a willing buyer. What is meant by the date of valuation? This is a date set by the municipality to which all values relate. The values must reflect the market value of the properties in accordance with the market conditions which applied at that date. The current date of valuation has been set at 1 July 2007. What happens when the market changes? The Act provides that the municipality must set a new date and re-value all properties at least once in every four years. Sectional Title Properties How will properties held under sectional title be treated? In terms of the Municipal Property Rates Act each registered sectional title unit must be separately valued and a separate rates account sent to each individual registered owner. Rates will therefore no longer be the concern of the body corporate. How does this differ from what has been happening in the past? Previously sectional title units were not valued separately and a single value was assessed for the entire property. Rates were accordingly raised on the entire property and a single rates account was sent to the body corporate, which had to apportion this account between the individual unit holders and collect the amounts owing by way of a levy. How will the new system benefit owners of sectional title units? There are many cases where some unit holders have failed to pay their levies and consequently the rates for the entire block have fallen into arrears. Previously, the municipality could only hold the body corporate liable and as a last resort would have to attach and sell the entire property in order to recover the rates. This was unfair on those unit holders who had regularly paid their levies. Under the new system sectional title unit holders are individually responsible for their own rates and only those owners who do not pay will be in danger of having their individual units attached and sold. It is important to note however that rates and any arrears owing up to the 30 June 2008 will remain the responsibility of the Body Corporate How will the common property in sectional title schemes be valued? By definition, a sectional title unit is a section together with its undivided share in the common property. Common property therefore does not have a separate value in the market place, its value being inherent in the value of each unit. How will account be taken of differences between the various units in a scheme? Individual units in sectional title schemes will be valued at what they would sell for on the open market. Valuers do not create value but merely interpret the market by analyzing sales and, thus, if sales show that there are price differences between various units within the same scheme because of size, view or other reason, then such differences will be taken into account when valuing the various units. How do I calculate my rates? Property rates are calculated on the value of the property. The Property Rates Act requires that this value must be the “Market Value”. Rates are calculated by multiplying the market value of immovable property by a cent amount in the Rand which is determined from the budget. Example Market Value R 800,000 Annual Rates ~ 800 000 x 0.009 = R 7200.00 Monthly = R 600.00 New rates were effective from 1 July 2008. If you have objected you must continue to pay the new rates until the Muncipality tell you otherwise. Should they agree with your objection then your rates account will be credited with the overcharge and backdated.

Written by: Bruce Forrest