SAPOA Raises concerns on Property Rates
Category Property rates
|On Tuesday 26 June 2018, the City of Joburg stated that: “The City of Johannesburg has taken a decision not to increase the property rates tariffs for 2018/2019.”
SAPOA is concerned that although the City makes the statement above, the City is not disclosing how the new values will impact on the rates. Although the tariffs remained the same, the values of most of properties increased and will therefore result in an increase in monthly rates.
What the article is not saying is that, from July 2018, property rates will be calculated on the values in the new valuation roll (GV2018). The impact on the monthly rates account will be based on the new value for each property.
The GV2018 consists of 879 005 rateable properties within the boundaries of the Johannesburg Greater Municipality and is valid for the period 1 July 2018 to 30 June 2022.
The increase in monthly property rates for business and commercial properties on rates accounts in July 2018 will reflect the increase in the value of the property.
If the new value of a property is 50% higher than the old value, monthly rates from July 2018 will also increase by 50%.
The impact on residential properties is softened by the increase in the rebate threshold from R200 000 to R350 000. The effect of the threshold will however be watered down where high property values are concerned as well as where lower-valued properties’ values were substantially increased.
A further concern is that the City of Johannesburg is budgeting for an increase of 12,1% in the income from property rates for 2018/2019. This increase is more than double the CPI.
Property rates tariffs could have been reduced if the increase in income was kept within the CPI.
SAPOA has appointed its team of consultants, Rates Watch, to interrogate the municipal valuations and municipal rates and to provide an impact and analysis it will have on its members.
Disputed Municipal Valuations
Earlier this year SAPOA raised its concerns with the City of Johannesburg relating to the manner in which the City will be implementing its new valuations, where such valuations are disputed by property owners. The City has subsequently released statements which have partially addressed our concerns. The current position is set out below.
The new valuations have been implemented with effect from 1 July, 2018 and are included in Municipal invoices from that date. Where ratepayers have raised bona fide objections to their proposed new valuations, they may not simply stop paying rates on their properties completely. The City has clearly stated that, in such circumstances, ratepayers need not pay rates on the new disputed valuations but must at least pay rates based either on the old valuations or on the valuations which the ratepayers themselves are proposing for their properties. Furthermore, if they do so, the City has confirmed that it will not initiate credit management processes against such ratepayers, provided that their accounts were not in arrears as at 30th of June 2018.
The City has stated that “where an objection to the new property valuation is declined, any outstanding rates on the property arising from the valuation will become due and payable immediately.” This statement does not address the situation of an appeal. SAPOA has informed the City of the legal position that, in the case of an appeal, the ratepayer is permitted by law to continue paying rates based on the old valuation or the ratepayers own proposed valuation until such time as the appeal is also finalized. We will be seeking confirmation on this from the City.
The City has also not addressed our concern relating to interest. We have pointed out to the City that, upon final resolution of valuation disputes, the law does not permit municipalities to charge interest on any shortfall in rates payable by the ratepayer. In a media statement dated 15 April, 2018, Mayor Herman Mashaba stated that the City would be charging interest in such cases. Subsequent statements by the City have been silent on this aspect. We will also be raising this with the City.