Inconsistencies and an "unacceptable" margin of error in the City of Cape Town's new valuations roll suggest the operation may have been botched.
This would leave thousands of homeowners paying exorbitant rates, while thousands of others would score, paying low rates and costing the city hundreds of millions of rands.
This is according to professional valuer Peter Meakin, based on his analysis of a random selection of 420 mostly residential properties sold in July 2009.
The city has based its new valuations roll on property sales and market conditions around its chosen valuation date, July 1, 2009.
Most of the properties that Meakin examined were given a valuation that differed from their sale price in that month.
Meakin's comparison reveals that, on average, property prices have been over or undervalued by more than 23 percent, about double the internationally accepted margin of error adopted by the city.
According to standards set out by the International Association of Assessing Officers, on average, residential market values should not deviate more than 10 percent from sales in areas with very similar properties. In older, more varied suburbs, this should not exceed 15 percent.
According to Meakin, the city's variance of 23 percent was unacceptably large. For example, a house sold for R1 million will, on average, be valued at either R1.23m or R770 000.
Owners of overvalued properties who missed last week's objection deadline will have to pay inflated rates. Those with undervalued properties, however, are unlikely to object and will pay reduced rates.
Meakin estimates this under-recovery will cost the city more than R500 million...
This would leave thousands of homeowners paying exorbitant rates, while thousands of others would score, paying low rates and costing the city hundreds of millions of rands.
This is according to professional valuer Peter Meakin, based on his analysis of a random selection of 420 mostly residential properties sold in July 2009.
The city has based its new valuations roll on property sales and market conditions around its chosen valuation date, July 1, 2009.
Most of the properties that Meakin examined were given a valuation that differed from their sale price in that month.
Meakin's comparison reveals that, on average, property prices have been over or undervalued by more than 23 percent, about double the internationally accepted margin of error adopted by the city.
According to standards set out by the International Association of Assessing Officers, on average, residential market values should not deviate more than 10 percent from sales in areas with very similar properties. In older, more varied suburbs, this should not exceed 15 percent.
According to Meakin, the city's variance of 23 percent was unacceptably large. For example, a house sold for R1 million will, on average, be valued at either R1.23m or R770 000.
Owners of overvalued properties who missed last week's objection deadline will have to pay inflated rates. Those with undervalued properties, however, are unlikely to object and will pay reduced rates.
Meakin estimates this under-recovery will cost the city more than R500 million...
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