Since the act was promulgated three years ago there has been a lot of misunderstanding of its valuation portion. It requires land and buildings to be valued instead of just land valuation.

Ratepayers panicked when they calculated their rates by valuing the full properties and multiplying this by their current rate. It showed increases of 500% and more. The act also says municipalities must adjust their rate in the rand to achieve the income required by their budgets.

In a first step in implementing the act, Johannesburg mayor Amos Masondo last week announced rates of a half cent in the rand for residential properties - the value of a property multiplied by 0,005. Most northern suburb property rates will be marginally higher or the same as before. The rates will apply from July 2008. Ratepayers can also query the valuation of their property, which can be found on the city's official website www.joburg.org.za.

Johannesburg is also using the flexibility of the act to rate by category. The city hasn't yet calculated commercial property or sectional title rates. These ratings will be calculated once the budget is complete early next year and the income needs established.

Masondo says sectional title owners will also get a special deal. The changes wrought by the act are thrown into high relief by this category. On a stand-only valuation they were rated as a single general residential property. Unit owners paid a proportion of those rates as part of their body corporate levies. But the new act says municipalities must value and rate sectional title units individually.

Sectional title managers Trafalgar took five Johannesburg sectional title properties at random and found that individual rates paid at 0,005c by sectional title owners would increase between 127% and 424%. Some of that increase reflects a rapid rise in flat, cluster home and townhouse prices.

The act also lets municipalities use rates as a carrot or stick. Masondo says he wants to encourage densification; expect rates for sectional title therefore to be low so as to encourage residents to move into flats.