Property Valuations – Happy? Not Happy? What to do?

Can You Help on Voter Registration Weekend? 

The IEC has announced that there will be a voter registration weekend on 10/11 March in order for them to collect correct addresses of voters as well as to allow voters to register and re-register.

This means that the 4 voting stations in the ward will be open on both Saturday and Sunday from 8am to 5pm and I will need some helpers on both days.

I have split the day into 2 shifts: 7’45am to 12’45pm and 12’15 to 5pm – basically 2 4 1/2 hour shifts. It will not be onerous and your prime tasks will be to ensure that everything runs smoothly and welcoming people who turn up.

If you can do a full shift, that will great, but if you can only do a few hours, that will also be good. The voting stations are (note that you can help at any of them, not just where you are registered). Please drop me a email on ttruluck@gmail.com if you can help.

Thanks for those who have already offered their help. I will start compiling the roster this week.

Ask an Official About Your New Valuation

Every year the City invites it’s residents to a presentation on what the new rates policy will be in July of that year. This year, in Region B, they are at:

– 6pm on Monday 19 February at Marks Park, Judith Rd, Emmarentia 
– 10am on Saturday 24 Feb at Danie van Zyl Rec Centre, cnr Rex & Plantation Rds, Claremont

Property Valuations for New Valuation Roll

Over the past few days, many residents would have received their new property valuation notice by email and/or post. If you haven’t, then don’t panic, you should be able to view it online on the www.joburg.org.za website on Tuesday 20th Feb.

If you have received your notice, then you are most likely shocked by how much it has gone up (note that for every R100 000 increase it represents about R60 extra on your rates bill). I deal with this below, but it is important to point out that property valuations have traditionally always been lower than the actual value. The City started to address this in the last valuation roll, but many were still under valued.

I suspect that to redress this, they have over-estimated on this voters roll. Some residents who’s valuations were too low, are now about right. Others, who were correctly valued or live in areas where the market is stagnant, will have received a valuation that is too high.

The standard knee jerk reaction is that it is WRONG and TOO HIGH!!! While this may be the case for some households, for others it is actually close to the real value of the house – ie how much you would sell it for if you were selling it. If the valuation is correct then you can’t object. If it is within a couple of R100 000 of the approximate value, then it is a judgement call as to whether you object.

If your valuation is too high (or too low) then objections open on 20 February – both for physical walk ins at the Revenue Walk In Centres like Randburg, but also the online portal. I am not sure how it works yet, but will play around with the site, data and objection process, and then report back in my next newsletter. Note that it is going live for the 1st time on 20 Feb, so there may be some snags and the site may bomb out if too many people access it.

Note on Pensioner Rebates

The threshold for determining the rates rebates for pensioners is currently a valuation of R2 million or under. If you property valuation is now over that, don’t panic as this threshold should hopefully be adjusted in line with the increases we are seeing now. This will be the subject of a future email when we know more info.

What is Valuation Roll?

I have taken the following from Schindlers Attorneys fact sheet on Valuation Rolls:

• Every property is supposed to have a municipal valuation. You should see a value on your municipal statement. This is the property valuation that the municipality has ascribed to your property.
• The municipal valuation is a value ascribed to your property by the Valuations Department and is determined based on a number of factors and the precise value is calculated according to formulae determined by the municipality’s Valuations Policy and the Local Government:  Municipal Property Rates Act 6 of 2004.
• The municipal valuation is based on a number of factors and the precise value is calculated according to formulae determined by the municipality’s Valuations Policy and the Local Government:  Municipal Property Rates Act 6 of 2004.
• The municipal value is not necessarily equivalent to market value, but according to law, it should be.
• For each General Valuation Roll, the date at which your property should be valued, is 1 year before the commencement of the General Valuation Roll (in this case, 1 July 2017).
• The amount that the municipality charges you for rates each month, is based on your municipal valuation. If the municipal valuation increases, then the amount you pay each month for rates will also increase.
• A Valuation Roll is a database in which the municipal valuations of all properties are recorded on that particular roll.
• Each roll is re-published once every 4 or 5 years and the property values (and categorisations) are updated at the same time. Depending on a number of factors, your property value may have stayed the same, or increased, or decreased, from the value contained on the last roll.
• The municipality should give you notice if your property is appearing on a roll that is being published in the near future.
• These rolls contain only property information like descriptions, valuations and categorisations; they do not contain reasons for why the municipality has chosen these.
• If you have received notice that your property is on a roll that is soon to be published, you should determine immediately whether you are satisfied with the municipal valuation. If you are not, you will have to object.
• Not receiving notice does not absolve a property owner from the responsibility for inspecting the roll and objecting on time.

OK, I Have My Valuation. What Now?

In most cases, your property valuation will increase. In some cases, by quite a bit. You have to ask yourself whether it is a true reflection of the value of your property (both the land and the buildings). If it is, then there is no point in objecting. If it is undervalued or overvalued then you can object. You have until 6 April to object.

The new rates will kick in on 1 July 2018. To work out how much extra you will be paying, look at your rates bill to determine your old rates charges and the number that CoJ uses to calculate it (in most cases it will be 0.007345 for residential properties).

If your property was valued at R2 million, then your monthly rates bill will be R2 000 000 less R200 000 rebate: R1 800 000 x 0.007345 divided by 12 = R1101,75.

If your property has increased by 50% to R3 million, then your new rates will be: R3 000 000 – R200 000 = R2 800 000 x 0.007345 divided by 12 = R1713,83 (55.6% increase)

Note that the rates usually also go up by about 6% every year, so you will probably be paying R1816,66 after 1 July.

This is the monthly rates charge that you will be paying for the next 4 or 5 years, so it is worth objecting to it if it is not accurate.

How to Object?

There is a very useful article on the SA Property Valuations website entitled “Things to Consider When Objecting to Municipal Valuations.” They say that there are a few things to remember when objecting:

• Only object to a specific property, not to the valuation roll in general or in part.
• You cannot object based on the value of other property values in the valuation roll (they may also be incorrect).
• Do not object based on rates increases. Municipal valuations are based entirely on current market value at the date of valuation and are entirely independent of rates. Though the valuation amount is used to calculate the rates it is the annual budget that determines the fee you pay and the annual increase.
• Use recent comparable sales (that are genuinely comparable) in the area.
• If your property is currently for sale or has recently been on the market, this information should be provided, together with any offers received.
• You can also object based on quality, size, restrictions, servitudes or other things that materially affect the value of your property in relation to the comparable sales in the area. Bear in mind that these may already have been taken into account. As mentioned, there could be errors, and there will obviously be issues that the Municipal Valuer is not aware of due to the nature of mass valuations.
• Be sure to provide details and all relevant documentation, without which your value cannot be changed.
• A valuation by a professional valuer or from an estate agent may be attached, but ensure that comparable sales are included in the valuation.
• Do not object if your valuation is correct. There are cases where on closer inspection an increase in the value is justified. Also if taken on appeal and it is found that the objection is frivolous, the objector may be liable for costs.
• If your value is too low, you should object. It is up to each individual’s conscience, but remember when you want to sell or need a bond, the municipal valuation will be considered.

Objection Timeline

• 1 July 2017 – Day Zero: the date that your valuation was done;
• Tuesday 20 Feb 2018 – Opening Day: the day you should be able to access your valuation online and at a Revenue Walk-In Centre (ie Randburg); Also the day from which you can object;
• Friday 6 April 2018 – Closing Day: the day that objections close. No objections will be allowed after this day unless an extension is granted;
• 1 July 2018 – Charge Day: the day the new rates will be charged from.
• 2020/21 – Estimated Objection Judgement Day: In 2013 there were over 80000 objections. This resulted in it taking 3 years to assess the objections. I would assume that, given the level of complaints I am getting, that there will be as many objections this time, if not more. So expect it to take 2-3 years to get a decision on your objection. Note that if your new valuation was more than 10% above or below the original 2018 valuation, it has to be automatically referred to the appeal board which will add more time to the process;
• 2021/22 – Estimated Judgement Day for Appeals:if you appealed your objection decision or it was referred for appeal, it can take another year.
• 1 July 2021/22 – New Day Zero: It all starts again 4 or 5 years after this one.

What I Am Going to Do: A Case Study

My house in Parkhurst has increased in value from R2.22 million to R3,438 million. When it was valued in 2013, I thought it a little high, but on the whole pretty accurate and so didn’t object. It soon went up to beyond that, but then stagnated.

Following my own advice in a newsletter, I obtained a property valuation from an estate agent last June for R2.5 million. If my new valuation was around R2.5-2.8 million, then I probably wouldn’t bother objecting. But it is way too high, so I will be objecting and will talk you through what I will be doing. If successful, it will save me +- R600/month or +-R36 000 over 5 years.

The appointed City Valuer has had to revalue almost 900 000 properties in Joburg. They do this by primarily looking at aerial photos and property sales in your neighbourhood. I would say that this is more heavily weighted towards property sales than aerial photos and they probably use a formula that works out the average of the recent sales near you to get a likely value range within which your property sits.

So you need to find out what that range is. Given that the valuer used a property value algorithm, you need to find one too. There are quite a few on the market – I used www.propiq.co.za (no, they are not paying me anything). The valuation report cost R95  and it provided a very comprehensive report upon which I am basing my objection.

From this report, PropIQ worked out that my estimated value was R3.2 million with an estimated high of R3.65 million and a low of R2.56 million. Note that they have not visited my house – this is just a thumbsuck based on sales and a few other factors in the area.

I now have to prove that my property is at the lower end of this this value range. To do this I have:

• A valuation from an estate agent dated 27 June 2017 for R2.5 million;
• I will be getting another valuation from a different estate agent this week. Am holding thumbs it is not high.
• I have compiled examples of properties in Parkhurst in the R2.5-2.9 million and R3-3.5 price range from the 18 Feb 2018 Sunday Times property section (you can probably do this via online property sale sites). This shows the difference between the two price ranges. My house fits more into the R2 million descriptors of “charming, well-maintained, solid, good bones, great opportunity, neat kitchen” than those of the properties in the R3+ million range: “offering privacy, lovely home, sense of space, abundance of positive energy, open plan, clever choice for an easy lifestyle, stylish renovation, spacious.” I will use this in my objection letter to show that my house should be in the upper R2 mill category.
• From the PropIQ report, it shows that there has been an increase in average annual property prices from R2.48 million in 2013 to R3.2 million in 2017. What is notable is that there was a big jump in average prices in 2014 to R3 million, but since it has hovered around the R3.1 to R3.2 million mark. This shows that the market is stagnant.
• The increase in the annual average price from 2013 to 2018 is R723 000 or 29.2%. Given that my house hasn’t had a major renovation in that time, and given the municipal valuation of R2.22 back in 20112/13 was a fair reflection of it’s value, a 29.2% increase should equate to a valuation of R2.87 million – which is much lower than the 2018 Valuation Roll of R3.438 million. This is more in the ball park of what the house is worth.
• The PropIQ report also lists the number of sales per year. In 2013 there were 196 sales of houses in Parkhurst. This has steadily dropped to 138 sales in 2017, the lowest since 2013. This is thus an indication that the market has been declining.

I am not an economist or a financial guru. I am like you. But I think the above should be enough to justify that my house is not worth R3.438 million. It didn’t take me long to do, cost R95 for the PropIQ report and R23.50 for the Sunday Times.

I will be submitting it after Tuesday 20 Feb – I hope it will be ok to do it online. But if not, will be going through to the Randburg Walk In Centre on cnr Jan Smuts and Braam Fischer.

I may not be too quick in submitting it, though, as you may be able to give me some pointers which I can use as well as think of other evidence to support my objection. Please share any ideas or data sources that I can use, and pass onto other residents.

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