Pro­per­ty va­lu­a­ti­ons fla­wed, says ra­te­pay­ers’ a­gen­cy

Knysna-Plett Herald - - Voorblad - Ya­seen Gaf­far

Are pro­per­ties in Knys­na being va­lu­a­ted pro­per­ly? Not if va­lu­a­ti­ons con­ducted by DDP Pro­per­ty Va­lu­ers for the mu­ni­ci­pa­li­ty is doing them, ac­cor­ding to the Knys­na Ra­te­pay­ers’ As­so­ci­a­ti­on (KRA).

It ar­gues that if the va­lu­a­ti­on ro­le for the en­ti­re town was mar­ket re­la­ted and u­ni­form­ly ap­p­lied, the per­cen­ta­ge char­ged per rand of va­lu­a­ti­on would be a lot lo­wer. “Un­for­tu­na­te­ly, it is ge­ne­ral­ly the hig­her­pri­ced pro­per­ties that ha­ve the lo­wer than mar­ket-re­la­ted va­lu­a­ti­on and the lo­wer­pri­ced ho­mes that ha­ve the mo­re accu­ra­te va­lu­a­ti­ons,” sta­tes the KRA.

The va­lu­a­ti­on roll re­flects the va­lue of the Log Inn in G­rey S­treet as R18-mil­li­on, and Gra­y­wood Ho­tel as R14.4-mil­li­on, whi­le the Tur­bi­ne Ho­tel on T­he­sen Is­land, sup­po­sed­ly in the high-end mar­ket, is si­mi­lar­ly va­lu­ed at R15.8-mil­li­on. The old part of Rex Ho­tel and Com­mer­ci­al Cen­t­re is va­lu­ed at R48-mil­li­on, and the Pro­tea Ho­tel on the wa­ter­front at R70-mil­li­on. ‘15 y­e­ars of er­rors’

Ac­cor­ding to the mu­ni­ci­pa­li­ty, DDP pro­per­ty va­lu­ers is its ap­poin­ted va­lu­ers, “through a com­pe­ti­ti­ve bid­ding pro­cess for three y­e­ars”.

The KRA dis­pu­tes this, saying DDP was ap­poin­ted for three terms: 2007 to 2012, 2012 to 2017, and 2017 to 2022 – “which will a­mount to 15 y­e­ars of po­ten­ti­al­ly re­pe­a­ting the sa­me va­lu­a­ti­on er­rors”.

The crux of the mat­ter is the va­lu­a­ti­on met­hods u­sed, the KRA says. The mu­ni­ci­pa­li­ty sta­tes that the da­te of va­lu­a­ti­on for the cur­rent roll sti­pu­la­ted on 1 Ju­ly 2016 is still va­lid and that three accep­ta­ble met­hods are u­ti­li­sed de­pen­ding on which pro­per­ties are being va­lu­ed, but the KRA con­tends that one met­hod should be u­sed and not all three.

“Un­for­tu­na­te­ly it seems as if DDP ha­ve u­sed all three in a rat­her hap­ha­zard man­ner, which has re­sul­ted in the si­tu­a­ti­on that we ha­ve in Knys­na,” sta­tes the KRA.

It re­fers to the mo­re pre­fe­ra­ble “com­pa­ra­ble sa­les” va­lu­a­ti­on, which is a re­al e­sta­te ap­prai­sal met­hod that com­pa­res a pro­per­ty to ot­hers with si­mi­lar cha­rac­te­ris­ti­cs that ha­ve been sold re­cent­ly. The met­hod ta­kes in­to ac­count the ef­fect that in­di­vi­du­al fe­a­tu­res ha­ve on the o­ver­all pro­per­ty va­lue.

‘One met­hod should ap­ply’

“This is the on­ly met­hod that should ha­ve any me­rit but this va­lu­a­ti­on is ba­sed on both the land and the im­pro­vements, and the cur­rent va­lu­ers on­ly ha­ve the land si­ze, not the im­pro­vement si­ze, so wit­hout one of the main com­po­nents in the e­qua­ti­on it is

im­pos­si­ble to gi­ve a fair com­pa­ra­ti­ve va­lue,” sta­tes the KRA.

The ot­her two met­hods u­sed are kno­wn as “accru­ed de­pre­ci­a­ti­on” and “in­co­me ca­pi­ta­li­sa­ti­on”.

The KRA con­tends that neither of the­se two met­hods should be u­ti­li­sed, be­cau­se ap­pre­ci­a­ti­on of pro­per­ty and va­lue of land are not ta­ken in­to con­si­de­ra­ti­on, and of­ten in­for­ma­ti­on re­qui­red for this is not accu­ra­te or ve­ri­fi­a­ble as it ge­ne­ral­ly co­mes from the land­lord or o­w­ner.

The mu­ni­ci­pa­li­ty sta­tes that w­he­re the­re are ob­jecti­ons a­gainst or in­te­rim va­lu­a­ti­on re­que­sts for in­di­vi­du­al pro­per­ties, the mat­ters are in­ves­ti­ga­ted and va­lu­es ad­jus­ted if ne­ces­sa­ry. “If we are pro­vi­ded with in­te­rim va­lu­a­ti­on re­que­sts for in­di­vi­du­al pro­per­ties we will in­ves­ti­ga­te the mat­ter,” it sta­tes.

But the KRA says the fai­lu­re of this sy­stem is that the­re is no re­a­son for a ho­me­o­w­ner to ob­ject if his pro­per­ty va­lue is low, so you ha­ve the sce­na­rio that if you want a fair va­lu­a­ti­on a­cross the bo­ard in Knys­na, it would re­qui­re an ob­jecti­on to be lod­ged for e­very pro­per­ty that is in­con­sis­tent with a­not­her, with re­a­sons lis­ted – an ex­tre­me­ly ar­du­ous task to tackle, es­pe­ci­al­ly as a pro bo­no exe­r­ci­se.

‘Re­va­lue en­ti­re roll’

“With the sham­bles that the roll finds it­self in, su­re­ly a bet­ter so­lu­ti­on would be to ha­ve the en­ti­re ro­le re­va­lu­ed by a dif­fe­rent va­lu­er or va­lue sy­stem. If you we­re to ta­ke the w­ho­le of the in­dus­tri­al a­rea and va­lue it per squa­re me­t­re of land va­lue on­ly at going mar­ket ra­tes in 2016, the va­lue of the in­dus­tri­al a­rea would be hig­her than it is va­lu­ed at pre­sent with both the buil­dings and the land. The­re are land and buil­ding pro­per­ties in the in­dus­tri­al a­rea va­lu­ed at less than 50% of the pri­ce that was paid for the land on­ly,” it sta­tes.

Alt­hough the mu­ni­ci­pa­li­ty says the va­lue of the pro­per­ties should re­flect mar­ket va­lue as on the da­te of va­lu­a­ti­on, the KRA says this is not the ca­se.

“The pro­blem is con­sis­ten­cy, the sy­stem is fla­wed and the re­sults speak for them­sel­ves. The­re are ab­so­lu­te­ly ir­ra­ti­o­nal va­lu­a­ti­ons in both di­recti­ons high and low, with ma­ny pe­op­le suf­fe­ring at the ex­pen­se of ot­hers.”

The mu­ni­ci­pa­li­ty sta­tes it is a­wa­re that the­re are con­cerns and ha­ve re­que­sted pe­op­le to sub­mit such in­for­ma­ti­on so that it is de­alt with ca­se by ca­se inste­ad of ge­ne­ral­ly. “This does not ne­ces­sa­ri­ly me­an hig­her ra­tes, though,” it sta­tes.

“This is an ill-in­for­med re­spon­se to a very sad and in­e­quit­a­ble si­tu­a­ti­on,” says the KRA. “The ra­tes can be either hig­her or lo­wer but in the end they must be accu­ra­te, de­fen­si­ble and com­pa­ra­ble, no mat­ter w­hat.

‘Mu­ni re­ne­ging on its du­ty’

“Why is the mu­ni­ci­pa­li­ty re­ne­ging on its du­ty and o­bli­ga­ti­on to the ra­te­pay­ers of Knys­na to de­li­ver a fair va­lu­a­ti­on roll? All it should ta­ke is for the­re to be 20% in­con­sis­tent va­lu­a­ti­ons in an a­rea to re­qui­re a re­va­lu­a­ti­on of the en­ti­re roll. We ha­ve been re­li­a­bly in­for­med that this cur­rent va­lu­a­ti­on cost Knys­na R5-mil­li­on which a­mounts to ap­prox­i­ma­te­ly 0.5% of Knys­na mu­ni­ci­pa­li­ty’s bud­get. Was this mo­ney well spent?” the KRA wants to know.

W­hen re­que­sted for com­ment on the fact that Wood­mill La­ne at R99-mil­li­on is va­lu­ed much hig­her than the Wa­ter­front at R59-mil­li­on, the mu­ni­ci­pa­li­ty said, “No ob­jecti­ons or in­te­rim va­lu­a­ti­on re­que­sts we­re re­cei­ved a­gainst the­se pro­per­ties. No pro­per­ty des­crip­ti­ons we­re pro­vi­ded and the va­lu­er did not in­ves­ti­ga­te the men­ti­o­ned va­lu­a­ti­ons. We can the­re­fo­re gi­ve no com­ment in this re­gard.”

The KRA re­sponds: “How is it pos­si­ble that the va­lu­er did not in­ves­ti­ga­te the va­lu­a­ti­ons of two of the lar­ger (top 10) pro­per­ties in Knys­na? The­se pro­per­ties should ben­ch­mark the va­lu­es of com­mer­ci­al pro­per­ties for the rest of the town.”

Pro­fes­si­o­nal va­lu­er Cor­ne T­heron of DDP was sent a list of que­s­ti­ons and as­ked to com­ment on the mat­ter but de­cli­ned, sta­ting she was as­ked not to.

“I re­cei­ved a call from the CFO of Knys­na Mu­ni­ci­pa­li­ty … in­structing us as ap­poin­ted ser­vi­ce pro­vi­der to not enga­ge with the lo­cal me­dia re­gar­ding the Knys­na ge­ne­ral va­lu­a­ti­on roll.”

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