A Municipal Property Rates Act Implementation Presentation

MUNICIPAL PROPERTY RATES ACT, 6 OF 2004

WERNER SARVARI

NOVEMBER 2007

Sectional Title Valuations in the City of Johannesburg

General Valuation 2008

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THE LEGAL DEFINITION

A unit means a section together with its undivided share in the common property apportioned to that section in accordance with the participation quota of that section

A section means a section shown as such on a sectional plan

SECTION + COMMON PROPERTY = UNIT

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THE LEGAL DEFINITION

Common property means:

The land included in the scheme

Such parts of the building/s not includedin the section

Land referred to in Section 26 (land purchased to extend a scheme)

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THE LEGAL DEFINITION

Exclusive Use means:

“a part or parts of the common property for the exclusive use by the owner or owners of one or more sections, as contemplated in section 27;”

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THE MUNICIPAL PROPERTY RATES ACT – WHAT TO VALUE

10. (1) A rate on property which is subject to a sectional title scheme must be levied on the individual sectional title units in the scheme and not on the property as a whole.

47. When valuing a property which is subject to a sectional title scheme, the valuer must determine the market value of each sectional title unit in the scheme

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WHAT TO VALUE?

A seller is selling a UNIT. This could be a“flat”, garage, toilet, servant’s quarters or any other section.

He also “sells” the undivided share in the common property, e.g. a swimming pool that is part of the scheme, including exclusive use rights, e.g. parking.

The selling price therefore also reflects the “value” of the common property and it will not be valued separately

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WHAT TO VALUE?

The valuation roll should therefore reflect each unit as listed on the sectional plan with the market value of that unit.

Any vacant land forms part of the value (price), as the owner owns (and sells) a portion of the vacant land in relation to the PQ.

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WHAT TO VALUE – Exclusive Use?

Section 27(4) of the Sectional Titles Act states that a person may transfer his interest in an exclusive use right to the owner of another section in the scheme by registration of a notarial deed of cession.

Section 27(7) of the Sectional Titles Act states that a person holding two or more rights to exclusive use areas by one title deed, may obtain a separate title deed in respect of one or more of the exclusive use areas.

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CHALLENGE!

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It is very possible that we may not have all information relating to exclusive use rights due to the manner in

which these rights are transferred and/or managed by the Body Corporate

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SOLUTION

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• Value what we have received from the Deeds office

• Approach owners to assist with information (public awareness and objection processes)

• Engage Bodies Corporate and Managing Agents

• Embark on a comprehensive physical inspection project during 2008

• Update records and revalue where necessary through the supplementary valuation process

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HOW DO WE VALUE?

• Market approach

• Analyse changes in values over time of each unit as it sells and re-sells

• Analyse sales of similar units within the scheme or other schemes

• Apply sales data to the subject property, considering any unique characteristics

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SOME OF OUR CHALLENGES

• Numbers – 155000 units for COJ

• No or old sales data for a scheme

• Title deed (ownership) verification is limited

• External vs. Internal inspections (Access to complexes & units)

• Locality within a complex (top vs. bottom)

• Postal addresses to inform owners of values

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