Tuesday, August 21

Capetonians urged to prepare for property re-evaluation

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The knock-on effect of rate increases as a result of value will also see owners of investment properties increase their tenants’ monthly rentals.

Cape Town residents are urged to prepare for their property reappraisals next year in order to better arm themselves against unreasonable value increases.

This includes gathering data, monitoring sales prices in their area and note any alterations to their properties.

Joburg residents are dealing with the aftershocks of their property valuation increases, with some having seen hikes up to 500%; those in Buffalo City have had their property values increase by up to 50%.

Any increases to property values will not only impact monthly rates bills, but also influence the cost of other services such as water, refuse removal and electricity, says Gary Palmer, chief executive of Paragon Lending Solutions.

The knock-on effect of rate increases as a result of value will also see owners of investment properties increase their tenants’ monthly rentals.

“If this is not possible, the owner’s net profit will decrease. The value of the property is also impacted in the eyes of lenders, who look closely at the net income of the property when determining the value of their security. For an owner who is hoping to use their property to raise capital for their business, municipal rates spikes – such as we have seen – can be a very serious obstacle in the path of their capital raising plans.”

Property owners will have the right to object to the new valuations, but the process is not as simple as some people may think.

According to Natalie Ginsberg of Margin Property Valuation Services, the objection process is as follows:
A dissatisfied property owner can lodge an objection within 30 days of the date of notice – although municipalities do allow for a longer period.
If the outcome is unsatisfactory, the owner can appeal within 30 days, of the decision notice.
An appeal board hearing will be held at which the owner can provide oral evidence and cross-examine the municipal valuation official – however, the onus is on the owner to prove the municipal valuation is incorrect.
“Therefore, the owner needs to ensure the appeal application is well-prepared with appropriate motivation.”

Ginsberg warns that disputed valuations can delay sales of properties, since all outstanding rates, including those under dispute, must be paid in full before a property can be transferred.

Furthermore, even if objections are successful, some are not carried through to the next roll, and so the same objection process has to be followed.

Cape Town owners should receive notices in February 2019 of the new General Valuation (market value) of their properties from the City of Cape Town. Objections will likely be lodged between March and April 2019.

The valuations will be based on market values as of July 1, 2018.

“Property owners need to be aware of their surroundings and the values of properties from now until the middle of the year. Ideally residential owners should try to view showhouses in their area, keep a note of sales, and note any alterations made to their properties during this time.

“Having an arsenal of data at your disposal will make it easier when it comes time to object.

“Professional valuation companies can help you with this,” Ginsberg says.

Palmer says homeowners should also seek independent valuations from time to time. 

“Cape Town property owners have an opportunity to learn from other regions. Doing your homework now could make a real difference.

“Unwelcome surprises could have a negative impact and if you don’t arm yourself with information now, you will struggle to defend your position next year.”

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