city of johannesburg 2008 general valuation roll 12 october 2007 background on valutations roll...

CITY OF JOHANNESBURG 2008 GENERAL

VALUATION ROLL

12 OCTOBER 2007Background on Valutations Roll process and compilation

Presented by:Werner Sarvari

Director: Valuation Services

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Responsibilities of the Municipal Valuer in terms of the Municipal Property Rates Act:

• Perform a General Valuation of municipality

• Produce General & Supplementary Valuation rolls

• Receive and consider objections

• Provide administrative support to the Valuation Appeal Board

• Customer service

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Primary Responsibility:

To do a general valuation of all properties in the municipality and produce a General Valuation

Roll at least once every 4 years

All our other business in terms of the Act flows from this function

The valuation roll is the rates base of the COJ

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BASIS OF VALUATION

MARKET VALUE (of the property as a whole)

JAAP Partnership programme 5

MY HOUSE…

JAAP Partnership programme 6

MY HOUSE…when I want to sell…

JAAP Partnership programme 7

MY HOUSE…when I apply for finance…

JAAP Partnership programme 8

MY HOUSE…when it must be valued for rates purposes…

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What must be determined according to the Act?:

Market value is the most probable price that a property would realise if sold on the open market, at the date of valuation, between a

willing buyer and a willing seller

TAKE NOTE…

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What must be determined according to the Act?:

• Market value is most probable price

• Date of valuation (COJ = 1 July 2007)

• Willing buyer & seller must meet certain criteria and are hypothetical

• Open market

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Some interesting changes in the new legislation:

• Physical inspection is optional

• Comparative and analytical methods may be used, including Computer Assisted Mass Appraisal (CAMA) systems

• Aerial photography may be used

• Use of predetermined bands is allowed

• Any other system may be used

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What should be considered during the valuation process?:

• Individual sectional title units

• Land and improvements

• Any illegal immovable improvement

• Any illegal use

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What should NOT be considered during the valuation process?:

• Movable improvements (use, method of fixture and intention)

• Improvements under the ground (mining)

• Plant & machinery

• Annual crops

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Three most often used methods of valuation:

• Market (direct comparison) approach

• Income (indirect comparison) approach

• Cost approach

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The Market Approach

• Primarily for residential properties

• Most accurate method

• Analysis of the market through use of sales

• Obtain additional information

• Apply market information to subject property

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Computer Assisted Mass Appraisals

CAMA is a system that uses property data to develop various models that can be applied to

specific pockets of property to derive most probable values, depending on the quality (not necessarily quantity) of data (input) and the required result (output). Models can range from very simple to

extremely complex.

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The Income Approach• Primarily for income producing properties, e.g. offices, flats (not sectional title), shops, factories

• Most accurate method where leases are involved

• Analysis of the market through leases (indirect comparison – i.e. income & expenditure)

• Obtain additional information

• Apply market (lease) information to subject property

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The Cost Approach

• Primarily for specialised properties or where little or no market information exists, e.g. schools, churches

• Assumptions make this the least reliable method

• Analysis of the market in terms of land values, cost of reconstruction and depreciation

• Obtain additional information from other sources

• Apply market information to subject property

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• We do not inspect all properties internally

• We use CAMA in a basic form

• We make use of additional resources to obtain property data, e.g. GIS, Building Control, Property brokers, Deeds office, questionnaires, public awareness, website, etc.

• We apply international best practices (pre-and post completion of the roll)

• We comply with legislation

Notes on the COJ process…

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END

QUESTIONS?