Cities grapple with valuations mess

CONTRARY to perceptions, Johannesburg is not alone in dealing with a valuation roll mess. Cape Town, reputed to be an efficient administration, is faced with the same headache.

Last year in June, the City of Johannesburg hiked its valuations of more than 80,000 properties by an average of 75%, which caused a furore. It was alleged that many of the properties subjected to these “absolutely excessive” increases had been “erroneously” placed on the supplementary roll in violation of the Municipal Property Rates Act.

The increases are calculated against the valuations assigned under the city’s 2008 general valuation roll. They come despite stipulations contained in municipal by-laws that supplementary valuations must set estimations by considering conditions prevalent in the property market at the time of the latest (2008) general valuation.

The Supreme Court of Appeal (SCA) of SA has declared the 18% rates increase made by the City of Johannesburg on business, commercial and industrial properties unlawful and irrational. The judgment, in an appeal made by the South African Property Owners Association (Sapoa), dealt with the city’s imposition of rates on commercial properties during 2009-10 when the city faced numerous challenges to the then new Municipal Property Rates Act and the new valuation roll.

The SCA found the Johannesburg council and mayor had not complied with the relevant provisions of the local government’s Municipal Systems Act, its Municipal Finance Management Act, and its Municipal Property Rates Act. All three acts make provision for community participation.

At the time, the municipality decided to increase the rates on business, commercial and industrial properties by 28%.

This came after its budget, providing for an increase of 10%, had been tabled and advertised for public comment.

The high court in Johannesburg found for the city, and held that the levying of property rates was not an integral part of the budget process.

The high court found that granting the relief sought by Sapoa was not in the public interest because it would probably bankrupt the city, leaving it unable to perform its constitutional duties. The association’s application was dismissed with costs.

The SCA held that the decision to impose the additional 18% was irrational and unfairly discriminated against property owners. It upheld the association’s appeal against the high court order.

However, a majority judgment of the SCA decided the problem created by the unlawfully levied rates could not be solved by a court order. This decision was in terms of the constitution, which required that the SCA make a just and equitable order.

The SCA declared the council had acted unlawfully in imposing the contentious rate, and stated how such a problem had to be dealt with in future.

In Cape Town, Seeff City Bowl agents Michael Hauser and Doris Ricketts say that after the chaos that reigned when the 2009 property valuation roll came out, they would have thought that the significant teething problems would had been resolved, but it seems once again that the system does not work.

“In fact, we would say that the problem is getting worse. Most estate agents are simply inundated with requests for assistance in objecting to the latest valuations,” the agents say.

Home owners have until the end of this month to object to their property valuations, after which the new municipal rates will come into effect.

Many pensioners who have lived in their homes for decades say they are faced with “outrageous” valuation increases that will result in monthly rates bills that they cannot afford.

Some of these residents live on meagre pensions and may end up losing their homes. Many of the older home owners are not even aware of the fact that they need to check the new valuations and lodge objections before the end of this month. “We are likely to see shock waves across the city come early May,” say the agents.

They argue that there is simply no consistency in the percentage increases.

“In the City Bowl suburbs, for example, homes in the same street are facing 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,” ask the two estate agents.