Garage Sections | How are they rated by the City of Cape Town in GV2022?
Category Advice
Property owners in the many sectional title schemes that fall within the City of Cape Town municipal jurisdiction will have recently noticed a change on their rates account, effective 1 July 2023. Why the change in municipal value? Why the change in the rates tariff applied to such value? Why does my residential apartment section attract a different tariff to my garage section? In this blog post, we will explore these questions and share some insight to demystify how garage sections in particular are rated.
Why the Change in Municipal Value?
The City of Cape Town rolled out their provisional valuation roll in late February this year, under the latest General Valuation (GV2022). The roll was published with updated municipal values for every property within the municipality's jurisdiction, allowing property owners to object by 30 April 2023. Your updated municipal value is your property's value appearing on your rates account from 1 July 2023. This municipal value is the basis of your monthly rates obligation over your property. Another change that took effect on 1 July 2023 was the rating tariff, which is as follows:
Residential tariff 0.0062730 cents in the Rand
Business & Commercial tariff 0.0147416 cents in the Rand
The non-rateable portion of your property's municipal value increased from R300 000 to R450 000 for residential properties under R5 000 000 (previously there was no upper limit). There is no valuation reduction applied to properties that do not have a residential rating category. Visit the City of Cape Town's website to calculate your rates amount.
What Rating Category Does My Garage Section Fall Under?
In a sectional title scheme consisting of residential apartment sections, the ancillary sections associated with such residential sections should fall under the Residential rating category. Examples of such ancillary sections include garages, open parking bays and store rooms. The link between a residential apartment section and an ancillary section is illustrated by being reflected on the same title deed or by being owned by the same owner entity.
Why Am I Receiving a Rates Bill with the Business & Commercial tariff applied to my Garage Section?
The short answer is because your garage section has been classified under the Business & Commercial rating category, thereby enjoying no residential reduction and having the Business & Commercial tariff applied to your garage section's full municipal value. If you are the owner of a residential apartment in the same sectional title scheme and your garage section is linked to such residential section by way of appearing on the same title deed and being owned by the same owner entity, then this classification is incorrect.
You should also receive a rates bill for your garage section if it is correctly linked to your residential apartment and the combined municipal value of the linked sections is equal to or more than R5 000 000. The rating tariff in this case should be the Residential tariff.
An example:
Residential apartment municipal value R1 800 000
Linked garage section municipal value R150 000
Combined value of R1 950 000 < R5 000 000 so R450 000 reduction to only the apartment section is applied, to calculate rates as follows:
R1 800 000 - R450 000 = R1 350 000 x 0.006273 = R8 468.55 annual rates
R150 000 x 0.006273 = R940.95 annual rates
If the Business and Commercial tariff has incorrectly been applied to your linked garage (or other ancillary) section, you will be paying R2 211.24 annual rates.
What To Do if your Garage Section is Incorrectly Classified?
In order to get your ancillary residential section correctly classified under the Residential Category, you will need to contact the City of Cape Town's municipal valuation division on this email address and complete the required documentation. Our Valuation Division at Steer & Co is well experienced in handling this process for you. Please email Gemma McGregor should you require assistance with this.
In summary, if you are the owner of a residential sectional title section you should not be receiving a rates account for your ancillary section, if the combined municipal value of the residential and ancillary section(s) is less than R450 000, and provided that such sections are recorded on the same title deed and have the same owner name. We encourage these owners to submit a dispute with the City of Cape Town if your residential ancillary section has been classified under the Business and Commercial Rates Category, so that your ancillary section is correctly classified and you are benefitting from the (lower) residential tariff and valuations reductions, if applicable.
Author: Nina Vass