Property owners and civic organizations are expressing their unhappiness with the City of the Cape Town’s recent decision to shorten the property valuation process. The City of Cape Town has decided to shorten the evaluation period of four years to three years.
The Greater Cape Town Civic Alliance secretary Phillip Bam said that they are particularly concerned about the accuracy of the process, asserting that it is “unfair and outdated”. Bam feels the increase will hurt the pockets of residents in Cape Town who are already under tremendous financial stress. With Value Added Tax increased by from 14% to 15% from 1 April, and a proposed 26.9% water and sanitation tariff hike, Bam said residents would be severely affected.
“This is not the first time the valuation is being brought forward. It’s unnecessary as it could have waited for the period to end. I suppose the City thinks we have all the money, as the valuation will go up most definitely. Property value has never decreased when a general property valuation was done,” said Bam.
He said that the public was not asked to give comment when the City made this decision.
“There are a number of poor people in the city, and we are concerned by the level of the requirements which the city will require for a rebate. This comes on top of the rates increase and all the other increases. The valuation is good but why is it required again, when it was done two years ago,” he said.
He said the City will value the property at market value, but the problem is that certain properties in that vicinity may have been upgraded so the value of the entire area will increase.
“They are not looking at the actual building conditions. This has not been taken into consideration. They are looking at the size and of the property and area value,” he said.
In explaining the process, the City of Cape Town said the value of an individual property is not the basis for the amount of rates income that is collected by the City as a whole. The main factor is the City’s budget.
“As an example, if we require R6 billion of rates income to ensure that our City operates efficiently and sufficiently, the valuation roll serves as the basis on which we calculate the rate-in-the-rand or the applicable property tax rate. We also calculate what rebates should be made to the vulnerable in our society and see how we can apply the rates in the most affordable manner for our ratepayers,” said Mayoral Committee Member for Finance, Councillor Johan van der Merwe.
“We also do not raise more than what is needed from rates. That is why you will find that the rate-in-the-rand can decrease after a new general valuation roll is implemented.”
The City chooses to conduct a GV every three years. By law, Van der Merwe said the council is required to do so at least every four years but have chosen a shorter timespan in an effort to mitigate major shocks to ratepayers. The last general valuation in Cape Town was conducted in 2015 (and implemented on 1 July 2016). The new valuation roll will be implemented as from 1 July 2019.
Valuations based on sales, not speculation
Valuations are based on actual property sales that have taken place in the open market around the date of valuation for each particular area. The attributes of different areas are considered when reviewing the market values.
Avoiding shocks
The Western Cape in general, and the metro in particular, has experienced major increases in house prices. Rates are collected for services that are not funded by tariffs. To avoid a rates shock due to these property price increases, Van Der Merwe said it would be best to ensure that valuations are kept up to date as far as possible.
Property owners will have the opportunity to inspect the GV2018 roll as from February 2019.
What is the money used for?
According to the city council, the money that is raised goes toward shared services such as fire services, the installation, maintenance and operation of traffic and street lights and providing services that stretch across neighbourhoods. It also helps us to help the vulnerable residents.
Meanwhile, the Greater Civic Alliance has called for a public meeting on Saturday 14 April to raise these concerns with residents. Bam said they would also engage with property specialists to find a reasonable solution to the valuation crisis that the City wants to enforce. He says the city has the funds to get a specialist to evaluate the proposals, however the ordinary citizen does not have those resources, and this is the value which the Greater Civic Alliance will bring to the community, he added.
“After the investigation is done, we will be giving our official comment, and we hope the city will listen. They don’t always listen, and the city takes a long time before they finalize the objections. This all cost the residents,” Bam concluded. VOC
