1ST JULY 2012 - A CRITICAL DATE.
Rates Watch is proud to advise of their resounding success at the recent hearings of the Ekurhuleni Appeal Board.The Appeal Board hearings were in regard to Section 78 Applications submitted by Rates Watch on behalf of numerous clients.Many of the applications were reconsidered by the Municipal Valuer and reductions were then made by him.Eighteen appeal cases were handled by the Ekurhuleni Appeal Board.Rates Watch were the major appellants at this hearing.Reductions in value of over R23 million were upheld by the Appeal Board, with a resultant saving in rates and taxes of R1, 4 million being achieved!!Two appeals lodged by Rates Watch against incorrect category entries on the original general valuation roll resulted in rates savings of R175, 000 to the delight of the appellants.A significant reduction in a mining property from R22, 6 million to R12, 6 million brought about a rates saving to the property owner of approximately R800,000!Rates Watch are particularly proud of these results, as they related to properties against which no objections were lodged or alternatively were incorrectly categorised on the general valuation roll.A section 78 application relates to a property that was incorrectly valued and against which no objection was lodged when the general valuation roll was open for objections.Rates Watch compliments the Ekurhuleni Valuation Section for the expeditious way in which they handled the outcome of the cases heard at the Appeal Board.Within a few days, official notices were forwarded to Rates Watch.
eThekwini Valuation Roll
The eThekwini Metro is currently calling for objections against their second general valuation roll.Objections must be lodged by no later than the 30th March 2012.Rates Watch is fully geared to assist all eThekwini property owners with the investigation of municipal valuations and the lodging objections if necessary.
HOW IS A PROPERTY VALUED FOR RATING PURPOSES?
There are many myths and misunderstandings regarding the basis of valuation for rating purposes.The Property Rates Act defines that the basis of valuation is "Market Value".Market Value in its simplicity is the price that a "willing and informed buyer, will pay a willing seller to purchase a property where neither party is under duress to transact."Therefore the only test that the Appeal Board will apply is the test of "Market Value".The following are examples of what a valuation appeal board will dismiss:· My new rates have doubled.· My new municipal valuation has increased in excess of 50%.· My municipal value should be a fixed percentage of market value.· I paid R1 million for my property but this is not market value. It should be much less than this for rating purposes. · Municipal value is determined at a percentage of my latest bank valuation.
WHAT ARE THE KEY FACTORS IN DETERMININGVALUE?
In all cases the municipal valuation is determined at a fixed date normally, one year prior to the roll becoming effective.The second eThekwini Valuation Roll will become operative on the 1st July 2012, but all properties are valued as at the 1stJuly 2011.Residential properties are valued on the "Direct Comparison" method of valuation.This means that the Municipal Valuer will obtain data relating to the property itself, the surrounding area and compare this data with sales in the immediate vicinity of the subject property.There are highly sophisticated tools available which enable the Municipal Valuer to predict "Market Value".The most important aspect of any municipal valuation is the collection of correct and accurate data relating to a property.In suburbs that are mainly homogeneous the collection of accurate and meaningful data is a fairly easy task.The challenge is where properties differ in terms of location, views, aesthetic design etc.In these types of suburbs, it is far more difficult to compare properties on a mass basis and the municipal valuer has to adjust his "norm" valuations to allow for positive features such as:-
view, locality, special features, ambience and the physical design of the property.Conversely, negative features must also be taken into account.These may include:-proximity to a taxi rank, busy roads, flooding etc.Residential property owners should keep records of the following:· Size of buildings.· Description of buildings.· Features such as swimming pools, landscaped gardens, boreholes, etc.· Any aspect that may have a negative impact on the property.· If the property has been offered for sale, copies of the advertisement showing the asking price.· Length of time the property has been on the market. · Documentation of any additions and photographs of the stage of completion as at the date of valuation.If a property owner can show that he was selling the property for R1million and the Municipal Valuer has valued the property at R1, 5million, the chances of success at an Appeal Board hearing will be very good.
NON RESIDENTIAL PROPERTIES (SHOPS, OFFICES, FACTORIES AND WAREHOUSES)
These types of properties are valued on the "Income Approach"This implies that a gross rental is determined, from which operating costs, allowance for vacancies, other costs directly related in the running of the property are deducted and the
"Net Rental" is then capitalised at a Cap Rate appropriate for that type of property.Non residential owners should keep the following records as at the date of valuation.
(eThekwini 1st July 2011)· Rent roll· Expense analysis for the financial periods prior and subsequent to the effective date of valuation.· Schedule of maintenance and repairs.· Vacancies.· Bad debts.· Gross lettable area of buildings.· Collection Fees.· Letting Fees.· Administration fees.· Selling details of property if placed on the selling market.· Cost of recent refurbishments· Cost of planned refurbishments and likely occurrence date.
FUTURE MAJOR VALUATION ROLLS
The following Metros will be compiling new valuation rolls effective on the 1st July 2013· Ekurhuleni· Tshwane· Johannesburg· Cape Town · Nelson Mandela BayThe date of valuation for these valuation rolls will be the 1st July 2012.Accurate information for the 12 months before and after the date of valuation should be retained by property owners
PROPERTY RATES BILL
In an article that appeared in "Die Beeld" newspaper on the 21st February 2012 there is a possibility that the Bill will be tabled before parliament during May or June of this year.Rates Watch submitted a very comprehensive document regarding comments to the Bill and it is hoped that due and proper consideration of these comments will be taken into account.
ARTICLE IN THE SA VALUER
An article entitled "The Municipal Property Rates Act of 2004. A critical review - seven years later"
has been published in the December edition of the S A Valuer.This highly informative review was expertly written by our Ceo, Clive Massel. It sets out the current difficulties that municipalities are experiencing in both the compilation and administration of their valuation rolls.To read the article (click here
Most municipalities, in terms of their rates policy offer some form of rates relief to pensioners.Generally, application has to be made to obtain this relief.The pensioners discount or relief will vary from each municipality and the extent of the relief is governed by the individual rates policy of the municipality.Pensioners are encouraged to contact the Rates Watch team, who will establish what relief they are entitled to.
Generally it is the experience of Rates Watch on a national basis that the standard of administration by most municipalities is very poor.It seems that this sub-standard of administration is not confined to just the municipalities.Even at a much higher level of administration, such as province the standard of administration and response to queries leaves much to be desired.The following is an example of our grievance in this regard.An application for condonation was submitted by Ben Espach, director of valuations - Rates Watch to the MEC - Gauteng Province on the 31st October 2011.A letter of reply was dated the 15th of December 2011, yet only posted on the 22nd of February 2012 and received by Rates Watch on the 28th of February 2012.In our view a delay of two months in replying to a letter and then a further two months for posting is unacceptable and in certain cases could severely prejudice the rights of the applicant.Province must lead by example.To add salt to the wound, the reply by the MEC is in our view incorrect.Although the MEC has the right of condonation it seems that it is almost impossible to obtain such relief, without making a High Court application.
THREE YEARS OF SUCCESS BY THE FIGHTING WATCH DOGS
It is exactly three years since Rates Watch commenced business and starting challenging municipal valuations.A key factor of the Rates Watch success story has been their ability to challenge municipalities and their municipal valuers regarding the correct interpretation of the MPRA.The results to date are nothing short of phenomenal.In Ekurhuleni alone, Rates Watch has achieved a 2,4 billion rand reduction in value, with a resultant saving of nearly R130 million in rates and taxes!!Nationally, we have obtained valuation reductions in excess of 3 billion rand.Rates Watch have been extremely innovative in challenging municipalities regarding incorrect and unjust implementation of the MPRA.Currently, Rates Watch are in the process of bringing about High Court declaratory orders against the Ekurhuleni Metro relating to the "no change" policy of their Municipal Valuer as well as a further order regarding the back dating of rates and taxes as a result of incorrect category entries in their general valuation roll - ab initio.These applications are time consuming, costly and require a very clear understanding of not only the MPRA, but also the Promotion of Administrative Justice Act (PAJA).Rates Watch has already successfully brought about a High Court mandamus application compelling the Municipal Valuer of Ekurhuleni to provide proper and adequate reasons for his objection decisions.Currently, Rates Watch is the only company in South Africa dedicated to monitoring and auditing of municipal valuations and rates accounts.
Recent National Results of Valuation Objections and Appeals
(1st April 2009 to 7th March 2012)
Until next Month From your Rates Watch Team "The country's leading professional Municipal Valuation and Rating Watchdog"
|Section 78 Applications
|Total reduction in value
|Total Rates savings