City of Tshwane property valuations challenged
This is pending the resolution of all current and forthcoming objections to the City of Tshwane’s property valuation roll, which reflected the new rates in municipal accounts from last month.
Michael Lombard said various residents were unhappy with the price hikes and questioned whether it was really market value related.
They were dreading to pay what some deem inflated prices, especially during this bleak economic time, he said.
The City recently published its General Valuation Roll, in accordance with the Municipal Property Rates Act.
The valuation roll is the basis for determining how much property tax should be paid, by each individual owner of property, within the municipal jurisdiction.
Lombard said the fairness of this type of tax has been based on the accuracy of the valuations.
He has been approached by many unhappy consumers, who feel that the new valuation roll does not reflect the true picture of the value of their property.
“The effect is that the tax increase on their property is now unaffordable.
“To amplify matters, the new rate remains due and payable until such time as the objection is overturned.”
Lombard told the Pretoria News that one of his clients is faced with impossibility of payment due to the increase.
Julian Edelson, who owns a building in Paul Kruger Street in the CBD, asked Lombard to assist him with his objection, since his previous property value was stated as R3 750 000.
On the latest municipal account, the new property value is reflected as R13 870 000 - a total increase of 30% per year, over the past five years.
“This is an alarming difference, as without any improvements to the property, in an area that is considered to be stagnating, the 2020 municipal valuation roll suggests that property value growth is at 30% per year. This is not substantiated by any property investment analysts,” Lombard said.
According to him, this would indicate that either the previous municipal value was too low, or the new municipal value is too high.
He said the Rates Act specifies that the rate, levied by a municipality on property, must be an amount in the rand on the market value of the property.
Lombard explained that the total combined municipal value of all properties within the municipal area is generally somewhat lower than the total combined true market value.
This, he says, offers some buffer for a municipality to absorb inaccuracies due to mass appraisal methods.
“But if a particular owner gets the downside of being on the lower end of the municipal value to true market value ratio and then moves into a situation of possible overvaluation, the difference from one general valuation to the next can be severe.”
He advised that should any property owner receive notice of an increase in property value, of more than 30% in total from the previous general valuation to the current, it is worth investigating and it would warrant an objection.
“The current economic situation in the country is fairly bleak due to the Covid-19 pandemic.
“The date of valuation for City of Tshwane is, however, as at June 2019. Therefore, the possible impact of the virus on property values cannot be taken into consideration,” Lombard said.
He added that, however, the impact was felt by property owners such as Edelson, as rent collection was down by up to 80%.
“Although property tax is a necessity to provide services by the municipality and to stimulate the local economy, the new municipal roll is evident of unequitable taxation in contradiction with the Act,” Lombard said.