City is playing valuation games

Cape Argus · 4 Apr 2018

THE City of Cape Town is being accused of using the speculative property market as a basis to inflate the valuations of properties in order to garner more rates and taxes. This has prompted economists and civic organisations to warn that overburdened ratepayers are being taxed out of their homes.

A report to council discussed at a mayco meeting yesterday stated: “Due to the continued phenomenal performance of the property market in the Western Cape, and the City of Cape Town jurisdictional area in particular, it is proposed that council cause the preparation of the next general valuation for the City of Cape Town for implementation on July 1, 2019, reflecting the market valuations of July 2, 2018.”

The general valuation 2018 will be implemented on July 1, 2019, reflecting the market valuations of July 2, 2018.

Johan van der Merwe, mayco member for finance, said the general valuation needed to be done every year.

“The general valuation means that properties might go up, but that means people can sell it for more. Property rates increases are separate to that of the valuation roll and are increased every year. We decided to do the general valuation early and more frequently because that will ensure that the impact is not so hard on the ratepayer,” he said.

Phillip Bam, secretary of the Greater Cape Town Civic Alliance, said the valuation roll meant property prices were set to increase.

“But the system that the City is using is really outdated and unfair. They use the market value of the properties and that in itself is a problem. The markets are affected by so many other factors. Lets take an area like Grassy Park where the roads are not often maintained. Go to Constantia or Bishopscourt where roads are much better. Now the same system or formula is used for both areas. Now in certain respects the market values between areas are different, but that does not mean the same system should be used for the City,” he said.

“This is why houses are so expensive in middle- and lower-income areas. Young people cannot get homes and people who cannot afford high rates and municipal accounts will be out of their homes. It absolutely absurd. Other factors like services and amenities can, for instance, be used. We can’t just use market values,” he said.

Llewellyn James Louw, manager valuation operations, will be the municipal valuer for the City.

Mike Schussler, economist at economist., said local governments across the country are increasing the costs of their municipal services.

“It is indeed true that they have increased their tariffs to well above inflation. It would appear that municipalities are running short of cash, but the increases are making it extremely difficult for ratepayers, who are continuously paying more. Young people will find it extremely difficult to buy property because these prices are increased through valuations. What is worse is that older people will also suffer because they would not be able to afford their homes and the cost of municipal services attached to it. They could end up selling their homes,” he said.

Jacques du Toit, property economist at Absa, said residential properties increased at 5%. “All properties will be affected by a valuation, but such increases are taken with the current market in mind. The property market is the Western Cape is still buoyant, given that municipal valuations increase every four to five years.”

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