It’s valuations time again

2018-06-26 06:00

Every three years, the City of Cape Town updates the General Valuations roll to ensure property rates are adjusted in proportion to property values. This year (2018) is a valuation year, and progress on reappraisals is already underway.

New valuations are expected to be made available for public comment early next year and will come into effect on 1 July 2019.

For property owners already struggling under heavy rates, water and electricity burdens, this is an understandable cause for concern, but property expert and Rawson Property Group franchisee, Schalk van der Merwe, says residents are not without recourse if their municipal valuations are overinflated.

“Rates are an important part of keeping our city running and have to be regularly updated to keep up with inflation and the rising costs of service delivery,” he says.

“That said, general valuations are based almost entirely on statistical averages, and don’t always reflect the true value of specific properties­.”

According to the City’s General Valuations information pamphlet, values are determined using “comparable property prices”.

In other words, they compare property features – such as erf size, number of rooms, number of bathrooms and general build quality – and assign values based on recent sales figures of homes with similar amenities.

“The problem is, a single street can have ten different three-bedroom, two-bathroom homes on 450m2 erfs, and each one of them could fetch a very different figure on the market,” says Van der Merwe­.

“One or two particularly high-value sales could also throw off the local averages, especially if there hasn’t been a high turnover in the area.”

According to Van der Merwe, accurate property valuations require a far more detailed analysis than just the basic features of a home. Of course, it’s simply not feasible for the City to undergo a full comparative market analysis study for each and every property, so they are limited to the automated digital comparison tools they have at their disposal. That puts the onus on homeowners to ensure their valuations are on point… but how, exactly, should we go about doing this?

“The best thing to do is approach a qualified and experienced local real estate agent to do a full valuation of your property,” says Van der Merwe.

“Be careful when selecting an agent, though – there are those who use the same tools and approach as the City, and will get similarly inaccurate figures as a result. You really want a comprehensive assessment that covers your existing municipal value, replacement value, indexed value and market value, preferably with a comparative market analysis document to use as backup if you need to lodge an objection with the City,” he says.

“You need to have all your ducks in a row so that, if necessary, you can lodge an objection as soon as the new General Valuation figures are released,” he explains.

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