Q&A: How the policy works

21 February, 2008

Why does eThekwini 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 building and maintaining roads, pavements, street lighting, and storm water drainage, building and operating clinics, parks, recreational facilities and cemeteries, beaches, libraries and administering the municipality.

Who pays rates?

Rates are paid by all owners of property, whether residential, commercial, sectional title unit owners and government departments.

How do we calculate rates?

Rates are calculated on the value of a property. The Municipal 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 in the budget.

For example:

If the market value of a property is R140 000; and the cent amount in the rand is 1.5 cents (R0.015), then amount due for property rates = R140 000 x 0.015 = R2 100 for the whole year, which means that every month the property owner will pay R175. This is calculated by dividing R2 100 by 12, as rates payable is spread over 12 months.

What is the purpose of the Municipal Property Rates Act?

• To regulate the powers of municipalities to impose rates;
• 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;
• 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, that is the price a willing buyer and willing seller agree upon;

Individual units within a sectional title complex will now be rated and each will receive its own
rates bill;

More flexibility in granting relief to the poor, medically boarded persons and pensioners; and

More flexibility in rating different categories of property.

Why have a municipal rates policy?

Section 3 of the Municipal Rates Act requires it of municipalities.

Why do we have different categories of property?

The Municipal Property Rates Act allows municipalities to levy differential rates on different categories of properties. This permits greater flexibility in
spreading the rates burden more equitably.

Why do we have categories of owners?

The Municipal Property Rates Act compels municipalities to define categories of owners to whom rebates, reductions and exemptions may be granted. For
example, pensioners and disability grantees will receive a percentage rebate, while sporting bodies and public benefit organisations will receive exemptions provided they meet criteria set out in the policy.

How is market value determined?

On a willing buyer, willing seller basis. The valuation system under the new Act will result in a more equitable system in that it will take into account what the property is actually worth. Take the example of two identical houses, one in Montclair and one in Umhlanga Rocks. Under the existing system, both are valued almost equally, whereas in reality, there is a vast difference in what these two houses actually sell for on the open market.

One of the requirements of the Act is that sectional title units must now be separately valued and rated. How will this benefit sectional title unit owners?

Each unit will be separately valued and billed for rates and thus, only those owners who do not pay their rates will be in danger of having their individual units attached and sold.

How will the rates of a sectional title unit differ from its neighbours how will each be valued differently?

Rates are based on value. Individual units in sectional title schemes will be valued at what they would sell for on the open market. If sales show there are price differences between units within the same scheme because of size or other reasons, then these differences will be taken into account in valuing the units.

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

A sectional title unit is defined as a section plus an undivided share in the common property. So, the value of every unit includes its undivided portion of the common property.

What happens when the market changes?

The Act provides that a revaluation of all properties must be done at least once in every four years to a new date of valuation.

Is my property value going up as a result of this valuation process?

The current revaluation of properties in the city is indexed to 1 January 1998, while the valuation date for this process is 1 July 2007. This is a period of nine-and-ahalf years during which property prices have escalated. The affect on individual properties will only be known after the preparation of the 2008/2009
budget.

My property has not been sold in 20 years,how are you going to value it?

By reference to similar properties in the neighbourhood that have sold.

When will I know what value the municipality has placed or assessed on my property?

The valuation roll should be open for public inspection and objection on 13 February 2008 for 30 days. Adverts will be placed in newspapers and every property owner, including owners of sectional title units, will receive assessments by post.

What if I am unhappy with the valuation?

The Act provides for an objection as well as an appeal process with regard to the valuation placed on a property and this may be exercised by anyone in respect of any property.

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. If you do not receive an account, then you, as owner of the property, must request an account.

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