THE people of the Greater Durban area will pay a record R2.5 billion in property rates to the eThekwini Municipality for the next financial year.
Keith Ross
Issue : Tuesday 25 May 2004
THE people of the Greater Durban area will pay a record R2.5 billion in property rates to the eThekwini Municipality for the next financial year. These rates are the lifeblood of the city and finance the municipality's administration as well as the construction and maintenance of the city's facilities.
The rates finance road maintenance; beaches; libraries; museums; clinics and other health services; parks and recreation areas; protection services (including the fire department ) and the maintenance of support services, such as human resources; the treasury; and the office of the city manager, among others.
"This is all funded under the umbrella of the Rates and General Fund," said the head of income and expenditure, Louis Kruger.
"The provision of electricity and water is funded separately from its own resources," he said.
"Hence electricity and water are not included in the annual rates, but are charged separately on an account rendered for this purpose."
Kruger said people who failed to pay their rates on time were charged interest on the outstanding amount. The interest for the first two months was 1.5%, and thereafter 2%.
"If this does not encourage ratepayers to settle their outstanding accounts, the council then follows the legal route to obtain judgment against the debtor and could, ultimately, sell the property to recover the debt."
He said two elements were used to calculate rates at the moment: the municipal value of the property, determined by the council's valuations department and a rates factor, approved by council.
"Simplistically, the property value is multiplied by the rates factor to arrive at the rates payable.
"Currently, the municipal property value is a combination of market value for the land and replacement cost of the building, less a depreciation factor, depending on the age of the building."
Kruger said this would change with the introduction of the Municipal Property Rating Act, which would enforce a system of valuation based on market prices.
He said the new system would not come into effect for two to three years, but he was aware that it was already causing concern.
The new system would place a greater share of the rates burden on people in areas where property prices had increased the most in recent years.
"People in places like Umhlanga Ridge, Durban North, Hillcrest and the Upper Highway area can expect a rates increase. But doing the valuations is going to be a major exercise and I don't expect it to be completed for a couple of years."
Kruger said the new valuations could benefit people in areas where property prices had been subject to a smaller increase.
"Property prices have increased far less in places like Bellair and Seaview, for instance," he said.
It was even possible that rates on properties in such places could decrease. Rates increases would be based on the rise in market prices above a norm.
"In theory, if property prices had risen everywhere in the city by 100%, and our budget for the year had gone up by 10%, everybody would get a 10% rates increase.
"But property prices in some areas have gone sky high, doubled or even trebled in the past few years. People in those areas can expect to pay more when the new Act comes into effect."
He said the increase in valuations would have to be calculated from an extrapolated factor for an area based on property price increases.
People who felt their property values had not increased as much as others in that area would have the right of appeal against their new valuations. These calculations would involve a mammoth task.
"We have sent a couple of people to the United States to look at a computer-assisted mass appraisal system," Kruger said.
Publisher: High Road
Source: High Road
Latest from eProperty News
- Love and property: a homebuying guide for couples
- From Civic Landmark to Collaborative Hub: A New Era for Muizenberg’s Post Office
- Growthpoint breaks ground on Tecoma Park, Cornubia, advancing its local logistics strategy
- Rosebank Mall adds Livo to its lifestyle line-up
- 166 sectional title units in the iconic Parktonian Hotel, located in the heart of Braamfontein, Johannesburg
eProperty News is a leading online commercial property marketplace serving the Southern African Investment, Office, Retail and Industrial property and allied sectors.