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Municipal Property Rates Act 

 

Frequently Asked Questions

 

What is the Municipal Property Rates Act?


In the past each province has valued and rated property under its own legislation. Some have valued land
only whilst others have valued both land and buildings. There have also been various methods of valuation
prescribed including market value and depreciated replacement cost.

The Municipal Property Rates Act is national legislation which has been introduced in order to provide
nationwide uniformity, simplicity and certainty as well as to take into account the historical imbalances
and rates burden on the poor.


What is the Purpose of the Municipal Property Rates Act?

·         To regulate the power of a municipality to impose rates on property

·         To make provision for municipalities to implement a transparent and fair system of exemptions ,
reductions and rebates through their rating policy

·         To make provision for fair and equitable valuation methods of properties

·         To make provision for an objections and appeals process to the market valuations

·         To ensure people are rated in a fair and equitable manner

 

What are the main features of the Municipal Property Rates Act?


Property will now be valued on the market valuation, in relation to the price that a willing buyer and willing
seller agree on the individual units within a sectional title complex will now be rated and each unit will receive
its own rates Bill. More flexibility in rating different categories of property 
 

What is the basis of property valuation under the Municipal Property Rates Act?


Property must be valued at market value, which is the amount the property would have realized if sold
on the date of valuation in the open market by a willing seller to a willing buyer.

 


What is meant by the date of valuation?


This is a date set by the municipality to which all values relate. The values must reflect the market
value of the properties in accordance with the market conditions which applied at that date.
The current date of valuation has been set at 1 July 2008.

 
What happens when the market changes?


The Act provides that the municipality must set a new date and re-value all properties at least once in every four years.

What does the Municipal Property Rates Act mean to me?


The valuation placed on your property under the new Act will be more understandable and equitable
in that it will equate to what your property is actually worth.

 
How does it differ from what has been happening in the past at Drakenstein Municipality?


Previously land was valued at market value whilst buildings were valued at replacement cost less depreciation
in respect of age and condition. This resulted in two identical houses in different parts of the municipality having
substantially the same municipal value in respect of the building value component with the only difference being
in the value of the underlying land. In reality however these two properties could sell for vastly different prices
depending on the neighbourhood in which each is located.

VALUATIONS

Why has my property value gone up so much?


The previous revaluation of properties was indexed to 01 July 2004 whilst the valuation date for this valuation

is 1 July 2008. This is a period of 4 years during which property prices have escalated.

 

 

What criteria was used to assess property values?


Market valuations are based on transactions between willing buyers and willing sellers and the factors that influence
these transactions.

Were different finishes such as tiles and fitted kitchens taken into account in the valuation?


There are many factors which influence the value of a property and these can broadly be broken down into location,
size of property, extent and type of buildings, quality and condition.

It must be mentioned that any exercise involving data-collection should always take cognizance of the ability
to maintain the integrity of this information. There would be little point in collecting information on those aspects
of a property that may be legally changed by the owner without the necessity of having to submit building plans
and thus alert the municipality to these changes.

 

Sectional Title Properties

How will properties held under sectional title be treated?

In terms of the Municipal Property Rates Act each registered sectional title unit must be separately valued and a
separate rates account sent to each individual registered owner.  Rates will therefore no longer be the concern
of the body corporate.

How does this differ from what has been happening in the past?


Previously sectional title units were not valued separately and a single value was assessed for the entire property.
Rates were accordingly raised on the entire property and a single rates account was sent to the body corporate,
which had to apportion this account between the individual unit holders and collect the amounts owing
by way of a levy.

How will the new system benefit owners of sectional title units?


There are many cases where some unit holders have failed to pay their levies and consequently the rates for the entire
block have fallen into arrears. Previously, the municipality could only hold the body corporate liable and as a last resort
would have to attach and sell the entire property in order to recover the rates. This was unfair on those unit holders who
had regularly paid their levies.

Under the new system sectional title unit holders are individually responsible for their own rates and only those owners
who do not pay will be in danger of having their individual units attached and sold. It is important to note however
those rates and any arrears owing up to the 30 June 2008 will remain the responsibility of the Body Corporate.



How will the common property in sectional title schemes be valued?


By definition, a sectional title unit is a section together with its undivided share in the common property.
Common property therefore does not have a separate value in the market place, its value being inherent in the
value of each unit.

How will account be taken of differences between the various units in a scheme?
Individual units in sectional title schemes will be valued at what they would sell for on the open market.
Valuers do not create value but merely interpret the market by analyzing sales and, thus, if sales show
that there are price differences between various units within the same scheme because of size, view
or other reason, then such differences will be taken into account when valuing the various units.

 

Rates

Why have a rates policy?


Section 3 of the Municipal Rates Act requires a Municipality to adopt a rates policy.

Why do we charge rates?


Municipalities need a reliable source of revenue to provide basic services and perform their functions.
Revenue from property rates is used to fund services that benefit the community as a whole. 
These include: constructing and maintaining streets, roads, sidewalks, street lighting, and storm
drainage facilities; building and operating clinics, parks, recreational facilities and cemeteries beaches,
libraries and the administration of the municipality. 

Who pays rates?


Rates are paid by all owners of property whether residential, commercial, sectional title unit owners
and even the Government Institutions.

 

How do we calculate rates?


Property rates are calculated on the value of the property. The Property Rates Act requires that this value must
be the “Market Value”. Rates are calculated by multiplying the market value of immovable property by a cent
amount in the Rand which is determined from the budget.

For example: If the market value of immovable property is R 380 000, and the cent amount in the Rand is R0.00490,
then amount due for property rates = R 380 000 -15000 [Discount on all Residential Properties, in terms of Section 17,
Property Rates Act, Nr.6 of 2004] x 0.00490 = R 1788.50 for the whole year, which means that every month
the property owner will pay R 149.04 (this is calculated by dividing R 1 788.50 by 12 as rates payable
is spread over 12 months) to the municipality.

Why do we have category of Property?


The Property Rates Act allows a Municipality to levy differential rates to different categories of properties.
This permits greater flexibility in spreading the rates charge more equitably. (Refer section 5 of the Policy)

Why do we have category of Owners?


The Property Rates Act allows a Municipality to define categories of Owners to whom Rebates, Reductions
and exemptions may be granted. Eg. Pensioners and disability grantees will receive a percentage rebate
while sporting bodies and Public Benefit Organizations will receive exemptions provided they meet the
criteria set out in the policy.

 
How and when do I pay rates?


Rates are paid monthly and are consolidated with your water and electricity bill. You can make payment at
any one of our cash halls / municipal offices or at EASYPAY pay points, direct debit, internet. If you do not
receive an account, then you, as owner of the property, must request an account.