This month is the official release date for the City of Cape Town’s 2018 General Valuations Roll and, for most ratepayers, that means an increase in the cost of owning property.
This is a bitter pill to swallow on top of high water, electricity and petrol prices. However, the release of the new roll does not need to be a bad thing, says Schalk van der Merwe, franchisee for Rawson Properties Helderberg Group.
In fact, it offers homeowners a rare and important cost-saving opportunity, he says. “The problem with municipal valuations is that they’re typically done at a distance as it is not possible for the city to send someone with the right qualifications to value each and every home, individually.
Instead, most properties receive what’s known as a ‘computer assisted mass appraisal’ – a largely automated process that essentially ingests statistical data from the deeds office and estimates probable property values based on averages.”
The problem is these statistical or “desktop” valuations are notoriously inaccurate because they only take basic features, like neighbourhood, erf size and the number of bedrooms, bathrooms and garages into account, Van der Merwe says.
“Anyone with any experience in property can tell you those details are far from the only things that define a home’s value. It’s common for properties that are identical on paper to fetch very different prices on the market due to elements like condition, flow, ambiance, fittings, finishes, views and gardens.”
In addition to excluding these key elements, the city’s valuations are also prone to being skewed when recent sales in an area have been limited.
“With the suppressed property market activity that we’ve seen over the last few years, a lot of Cape Town neighbourhoods haven’t had as much property turnover as usual. That gives the city a limited sample size to use for its calculations in those areas, and increases the risk of artificially inflated averages, thanks to one or two unusually high-value sales, says Van der Merwe.
As a result of these inaccuracies, it’s common for property owners to be paying higher rates than they need to – something that’s easy to overlook if it’s been some time since you’ve had your property professionally valued.
Thankfully, he says the release of the new General Valuations Roll offers the “perfect opportunity” to address this issue by lodging an objection. But homeowners have a finite time after the roll is released to object to municipal valuations.
“Since that only happens once every three years, it’s really important to grab the opportunity with both hands.” To do this he recommends homeowners contact a real estate expert in their area to conduct a proper property valuation and comparative market analysis to back up an objection if they think their updated valuation is unfair.
As for what a “proper” valuation entails, Van der Merwe says a comparative analysis using properties sold at the same time the municipal valuations were conducted (June 2018) is essential.
“The city’s objection committee only accepts well-motivated objections. We’ve found a comparative market analysis to be the most effective way of providing this.
“Essentially, we find properties similar to yours that sold during the valuation period and use a combination of photographs and written explanations to show why your home would have achieved a similar sales price.”