If any physical or legal changes are made to a property, the municipal valuer must perform a supplementary valuation as instructed by Section 78 of the Municipal Property Rates Act (MPRA). Values can also be amended if the property is over- or undervalued. Recently, we have encountered a number of such cases where values are being amended repeatedly and, we believe, frivolously.
We have noticed these value changes tend to be more applicable to high value properties like shopping centres. We have therefore concluded that this forms part of a valuation roll audit for undervalued properties, which also leads to revenue enhancement for the municipality.
One example worth citing is the case of a shopping centre that was revalued. In this instance, an increase in the property value of the centre was not warranted as there was no legal or physical change to the property. The municipal valuer nevertheless increased the value, citing as a reason “Sect 78(1)(d)-of which the market value has substantially increased or decreased for any reason after the last general valuation”.
The kicker in this instance is that this specific property was subject to a Valuation Appeal Board Hearing. Legally, no revaluation of a property is supposed to occur if the valuation is already the subject of a Valuation Appeal Board decision, as the matter then falls under the VAB’s jurisdiction.
The property value history in this example is as follows:
- Valuation Roll Value: R199 400 000
- Objection Outcome: R199 400 000
- Valuation Appeal Board Outcome: R167 500 000
- Supplementary Valuation Roll Value: R256 000 000
- Supplementary Valuation Objection Outcome: R256 000 000
In summary, we were successful in arguing for the correct market value during the appeal process. The municipal valuer then increased the value. The reason for the supplementary valuation could not have been section 78(1)(d) because no changes were made to the buildings. If it were the view of the municipal valuer that the property was substantially incorrectly valued, it would imply that he did not agree with the decision of the appeal board. In this case the value must be taken on review to the High Court. The decision of the appeal board is funtus officio and cannot be amended with a supplementary valuation. This forced a costly and time-consuming second objection and appeal process. An appeal has been lodged and we now await a hearing date to get the original appeal board outcome reinstated.
The end result of such an action by a municipal valuer is that it puts an endless and unnecessary burden on the property owner. The challenge to pay the inflated rates of R162 028.75 per month (R1 944 345 annually) is substantial, and if not complied with, the disconnection of municipal services is what follows. The last hurdle is usually getting the rates account reconciled and the over-payment of rates credited and paid back to the property owner.
In a second example, the value of a residential property was changed six times, with the value being placed between R150 000 and R650 000 on the various occasions. These changes occurred over three supplementary valuation roll periods, which certainly does not make sense. This is also not an isolated example – we have encountered several of these recently.
It is advised that consumers and property owners take note of any changes to their property rates payable and investigate or appoint a specialist as soon as possible, as the process to correct it can be long and cumbersome.