Sky-rocketing property valuations by the City of Cape Town have estate agents challenging the new valuation system. Incorrect valuations could result in some homeowners being forced to pay more for their rates say the agents. The problem has mainly hit Cape Town City residents, whose homes were re-evaluated last year.
Inflated property figures
According to Seeff estate agents, Michael Hauser and Doris Ricketts, many pensioners who have lived in their homes for decades are faced with outrageous valuation increases that will result in monthly rates bills that they cannot afford. “Most of these residents live on meagre pensions and will end up losing their homes. Some older home owners are not even aware that they need to check the new valuations and lodge objections before the end of April. We are likely to see shock waves across the city come early May,” say the agents.
Valuation increases hit the City of Johannesburg residents hard in 2012 when 83 000 property market values were increased by 75%. According to reports, some of these properties were incorrectly re-valued and increased by an excess of 300%. In statement issued last year, John Mendelsohn, DA Shadow MMC for the Municipal Public Accounts Committee (MPAC), said the Valuations Department has not just inflated, but hyper-inflated, property values from their 2008 values (the date of the last General Valuation) to levels that do not resemble the current market values. The 2008 values related to actual property values at the height of the property boom.
“The values now being assigned, according to reports reaching me, vary from 75% to 150% to 300% above the 2008 values, ignoring the fact that from 2008 property values actually dropped and are only now beginning a slow recovery to 2008 levels,” he said.
Consistency is key
According to agents the problem with valuation figures is that there is no consistency in increases. In Cape Town’s city bowl, for example, homes in the same street face increases of up to 63%. “Older homes on smaller plots are valued higher than modern homes on bigger plots. How is it possible that there can be such disparity?” say agents.
Seeff agents are now assisting many home owners with valuations they describe as ridiculously inflated and preposterous. Colleagues in other branches say that this problem is not unique to the city bowl and they are all facing the same challenges.
How is property valued?
According to Seeff, properties have been valued at the same date of valuation, to ensure fairness, i.e. as at 1 July 2012. The City’s valuations are based on actual property transactions (sales) that have taken place in the open market around the date of valuation. The Local Government: Municipal Property Rates Act, no 6 of 2004, states that all properties on the valuation roll must be valued at market value, defined as “the amount the property would have realised if sold on the date of valuation in the open market by a willing buyer to a willing seller”.
But according to agents there is little evidence that the above formula was used as a basis to calculate the new values. “Rather than using what a home may have fetched on the open market at the date of valuation, it appears that the sales prices during that period were used as a guideline. The difficulty with this is that plot sizes differ. While some are new, modern and spacious with stunning views, all of which would increase the price, many are old and un-renovated, have no gardens, views or any real attributes that could justify the proposed values,” says agents.
According to Seeff, home owners with objections that amount to more than 10% of the valuation are also faced with significant action and documentary evidence. “The time and resources that this takes should be of great concern, not only that of home owners and estate agents, but that of the local municipality. This is time and money that could be better spent,” say Seeff agents.
According to Peter Meakin, a registered professional valuer of the Associate Institute of Valuers SA, the biggest flaw in this evaluation system is that it’s probably too sophisticated.
“The valuation system relies on high skills in modelling and statistical analysis, which the public and indeed most valuers do not comprehend. This means that the computer results are sometimes inexplicable,” he explains.
How can you object to your property valuation?
The City of Cape Town’s latest valuation roll, General Valuation Roll 2012 (GV2012), has been published and all listed properties have been valued at market value as at the date of valuation on 1 July 2012.
Residents not satisfied with their property's valuation as listed on GV2012 may lodge an objection during the formal objection period, 21 February to 30 April 2013. An objection must be lodged with the prescribed objection form, which should be completed before 30 April 2013. For more information click here.
For the Johannesburg area objection forms are available from the 10 venues where the Valuation Roll is available. Residents can also visit the City of Johannesburg's website for more information on the objection procedure.