Are you being overcharged for your assets?
Municipal valuations are performed at least once every four years. The City of Cape Town conducts valuations to determine the value which the property would fetch if sold on the open market to a willing buyer from a willing seller. This figure is then used to calculate the rates payable by the property owner. Find out what this actually means for you as a property owner!
Municipal Valuations Process
Currently, municipal valuation is conducted using Comparative Market Analysis. CMA is the most common method of property valuation used by experienced estate agents. It accounts for the previously sold price of the property as well as the sold prices of similar properties (floor size, erf size, number of bedrooms, etc.) in the area.
Municipal Valuations Effect on Rates
According to the Department of Cooperative Governance &Traditional Affairs, the rates paid by property owners in Cape Town are calculated by multiplying the market value of immovable property by a Cent amount in the Rand that the municipal council has determined. Municipal rates are calculated using the following formula: ((Municipal Value – Rebate) x Cent in the Rand) ÷ 12 = Monthly Rates.
Let’s take a look at an example: A sectional title is municipally valued, at R2,000,000 in 2019. For the years 2020 and 2021, the rates payable by the unit’s title deed holder were calculated using a Cent amount in the Rand of R0.00603 in the City of Cape Town. Therefore, the monthly rates are equal to R854.25 and the annual rates are equal to R10251.
What Is My Municipal Valuation?
It’s very easy to find your municipal valuation using the City of Cape Town’s official website. The most recent (at time of writing) CoCT valuations can be found in the 2018 CoCT Valuation Roll. However, be careful to note that these valuations will no longer be relevant once the 2021 CoCT Valuation Roll is compiled.
Are You Paying Too Much?
With the ebbs and flows of the Cape Town real estate market, property prices aren’t what they were 4 years ago… Many properties as of the 2018 valuation roll are overvalued and owners are therefore paying elevated rates. For landlords with multiple properties and for those living in the luxury segment, overvaluation can be costly.
How to Save on Municipal Rates
Using the example of the municipally valued R2,000,000 flat again we can note that, depending on the area and block specific details, actual sold prices for such units may be much lower now. Sold prices for sectional titles can be as much as R400,000 less than their 2018 valuation roll value, selling at R1,600,000 in the 2021 market economy. If the rates of this unit were calculated using the actual sold price then the monthly rates would be equal to R653.25 and the annual rates would be R7839. That’s a 23.53% saving on rates which could be spent on maintenance or improvements!
How to Dispute Municipal Valuations
Anyone who owns property in Cape Town can dispute the CoCT municipal valuation should they wish but it must be done during the valid dispute period, according to the correct procedure and backed up by sufficient evidence. Getting professional assistance on this from trusted real estate professionals can make the process run much more smoothly.