Municipal evaluations
Category Property market overview
Most property owners would have recently received correspondence from the City of Cape Town with the new municipal evaluation of the property.
The City's General Valuations roll is adjusted and updated approximately every three years as a means of ensuring property rates correspond to property values.
"The evaluations are generally adjusted upwards, which means an increase in rates, water, electricity and other municipal services," says Dave Muller, Franchisee at Leapfrog Edgemead.
It's important to pay heed to the fact that rates and taxes are a key revenue stream for the City to keep running efficiently, and it has to consider inflation and the ever-increasing cost of service delivery, Muller explains.
However, general municipal evaluations are based on statistical averages, which can't always accurately account for the true value of a given property. The methodology employed by the City relies on "comparable property prices", which is essentially an aggregate of properties of the same size and with similar features, but doesn't account for the value-adds that make a property more appealing on the open market.
Muller elaborates: "When it comes to buying a property the physical condition and aesthetic appeal of the property can significantly influence the perceived value and thus have an impact on what the buyer is prepared to pay for it."
"It is simply not possible for municipal evaluations to consider the water-friendly garden and modern bathroom fittings your property boasts, but a potential buyer may well see this as a significant value-add," Muller says. In lieu of inspecting each of the more than 800 000 registered residential properties in the City of Cape Town's mandated area, the figures produced by the automated tools have to suffice.
However, property owners can take steps to ensure their evaluations are accurate, by approaching trusted property advisor to do a full valuation. "Leapfrog's trusted property advisors have the expertise, tools and market insights that consider factors such as current municipal value, replacement value, indexed value, market value, property features and the area at large into consideration," Muller says. "This kind of evaluation will give you a better idea of what your property will fetch on the market, should you decide to sell."
The good news is that there is some recourse for property owners who believe the evaluation of their property is overinflated. "If you feel your property has been over- or under-valued you can lodge an objection with the City. It's a good idea to submit an independent evaluation with your objection," Muller advises.
It might feel like an administrative hassle now but ensuring that your property is as accurately evaluated as possible can mean significant savings on rates over the course of the next few years.
Author: Leapfrog
