Administration of the valuation of property at the local government level with special reference to the Durban Municipality.

Abstract

In this dissertation, a study is undertaken of the administration of the valuation of property at the local government level with special reference to the Durban Municipality. The establishment of local authorities is a direct result of the Government's policy to provide goods and services for local communities. Consequently, it is significant to locate the place of local authorities in the constellation of public institutions, and to examine their rapidly increasing number of functions. Past legislation, authorising the establishment of local authorities, coupled with a discussion of the Regional Services Councils Act, 1985 (Act 109 of 1985), provide the necessary insight required for the understanding of the property valuation function by local authorities. The principles pertaining to the theory of valuation are explored, with particular emphasis on the impact of supply and demand on the valuation of property. The valuer, who performs numerous functions, is an important cog in the valuation process. Since the valuation of property is a prerequisite to the rating of property, it is also useful to examine the latter aspect to appreciate the interaction between valuation and rating. Legislation pertaining to valuation is voluminous. At the Central Government level, the Department of Public Works and Land Affairs is responsible for the valuation of property. The Expropriation Act, 1975 (Act 63 of 1975), has played a significant role over the judicial influence of property valuation. The valuation profession has taken a significant step forward since 1982, with the promulgation of the Valuers' Act, 1982 (Act 23 of 1982), which emphasizes the necessity of raising the standard of the valuation of immovable property throughout the Republic of South Africa. At the provincial level, separate ordinances, pertaining to property valuation, exist for each province. Finally, local authorities promulgate bylaws to regulate the property industry. There is an abundance of literature on the methods of property valuation. The different methods of valuation are the Direct Sales Comparison Method, the Income Method, the Land Residual Method and the Cost Method. The aforementioned Methods of valuation are particularly suitable to the estimation of the value of vacant land, flats, townships and schools, respectively. The scope of the functions o f the Durban Municipality's Estates Department has grown so vastly since 1914 that there are ten clearly demarcated valuation zones presently. The aforementioned Department's intricate organisational structure, with clearly defined functions delegated to the divisions, sections and subsections, ensure that tasks pertaining to property valuation are concluded efficiently and effectively. The degree of subjectivity in the valuation of residential properties has been drastically reduced with the introduction of the computer at the Estates Department. The work procedures pertaining to the drawing up of the Valuation Roll and the functioning of the Valuation Appeal Board, respectively, ensure efficient and effective control in property valuation. In the light of the aforementioned observations, the following recommendations are made: (i) amend the Valuers' Act, 1982 (Act 23 of 1982), to reserve specific valuation tasks for valuers; (ii) that the valuer should persevere in his studies on property valuation; (iii) that the valuer should adhere rigidly, at all times, to the guidelines of public administration; (iv) the designation of 'building valuer' should be changed; (v) the Durban City Council's rate of investment in property should be accelerated; (vi) the training and orientation of valuers should be an ongoing process. (vii) separate terms of reference should be assigned to the Estates Department; (viii) separate departments should be created for valuations and estates, respectively; (ix) a simply worded and uniform valuation ordinance should be implemented in the Republic of South Africa; (x) a uniform method of valuation, for a particular type of property, should be introduced; (xi) land and buildings should be estimated at market value; (xii) the services of a full-time Senior Legal Adviser are essential; (xiii) the unearned increment of the capital value of land should also be taxed; (xiv) the frequency of valuations should increase during periods of accelerated expansion; (xv) a uniform rating system should be implemented throughout the Republic of South Africa; (xvi) the negotiation process should be used as a cross-check to enhance the validity of valuations; (xvii) the fees paid to the members of the Valuation Appeal Board should be increased; and (xviii) larger pieces of vacant land should be taxed at a higher rate.