GVR: Does a general valuation roll ever close?

This article was originally produced and published by Schindlers Attorneys.

This article examines the legal question of whether a general valuation roll ever ‘closes’, such that no further objections can be lodged to the information contained on it.

Why do we care?

Sometimes property owners (or other interested parties) only discover that a property has been incorrectly over or undervalued, or categorised, for the purposes of a general valuation roll (“GV”), after the next GV has commenced. Colloquially we refer to the first GV as having ‘closed’ when the second one commences, and generally municipalities will not allow objections to the information contained on the GV that has closed. This prohibits owners or other interested parties from correcting errors on a GV that has closed, which could result in the owner suffering financial harm as a result of over-valuations or incorrect categorisations that cannot be corrected.

The Law

The legislation that governs the issue is the Local Government: Municipal Property Rates Act No 6 of 2004 (hereafter referred to as “the Act”).

Law in Practice

The reason that a GV is said to “close”, is because the Act prescribes that the valuations ascribed to the property by the municipality on the GV is meant to (bar for a closed list of exceptional circumstances) endure for a period of 4 (or in some cases 5, if special permission is obtained to extend the roll) years. The idea is that a municipality values all properties within its jurisdiction once every 4 (or 5) years, and increases the rate of taxation in relation to the property in the intervening years (rather than re-valuating it) to account for inflation. This ensures that those who own property pay proportionate taxes on it and that the tax rate increases with inflation.
There is a closed list of instances in which a property can be re-valued during the life of a GV. They relate to situations where you often find substantial increases or decreases in the valuation (such as subdivision, consolidation, demolition, etc). There are also two “catch all” situations in the list – namely when a property has been “historically undervalued on the last GV” or when there are exceptional reasons for re-valuating the property. Outside of these listed cases, properties are not meant to be valued on the GV and then valued again during the life of the GV. The valuation and categorisation that thus should apply to a property for the life of the GV, is contained in the GV, which is published before the GV comes into operation. The property owner then has the opportunity to dispute the valuation data and have it amended if it is incorrect.

As previously stated, the common practice amongst municipalities is: once a new General Valuation Roll is released, to act as if the previous GV closes. This means that you are not permitted to dispute (and make amendments to) valuation data contained on a prior GV, once that GV has “closed”.

This is, however, merely practice and there is nothing in South African law which prescribes that GV’s ever “close”. There are two notable instances in which a municipality will generally accept a dispute declared after the “closure” of a GV. This is firstly where a dispute is declared before the GV has closed and is only adjudicated to finality afterwards, in which case the valuation data on the GV is amended with retrospective effect, and applies up until the end of the GV. The second exception occurs when a municipality publishes its last supplementary roll to the GV after the closure of the GV. This naturally means that all disputes dealt with in terms of this last supplementary valuation roll (SV) will be lodged and adjudicated after the closure of the GV to which the SV relates.

There is no limit to the number of SV’s that a municipality can publish in relation to any GV. However, there is a minimum number of 1 per year and the municipality must publish a sufficient number of SV’s to allow objections to be lodged for periods that successively cover the entire duration of the GV. This is why the last SV to a GV is always published after the “close” of the GV – the municipality has to wait for the last day of the GV to pass, then collate information on what objections were lodged up to that date, then produce the last SV, and then publish it and process disputes dealt with in terms of it.

Challenges to a ‘closed’ GVRs

In order to challenge valuation data on a prior GV, the Municipality would need to publish a new SV containing the property information, which would then be open to challenge in the ordinary course. However, the question arises as to how to get a property onto such a fresh SV. The Act prescribes that supplementary valuations can be made for the reasons set out in section 78, and the Act prescribes the procedure to be followed when property valuation data appears on a SV, but it does not prescribe how/when property data must be included in a SV. Convention amongst all municipalities is to include any property that the municipality has detected has been incorrectly valued for the purposes of the current GV, which should include any properties that consumers have queried the valuation data with, and the municipality has investigated and determined that it is incorrect. However, there is no law dictating that once a consumer has lodged such a query with a municipality (referred to as a “section 78 query”) that the property then must appear on the next SV.

If, after a consumer has lodged a section 78 query, the property does not appear on the next SV, convention is for the consumer to lodge an objection in relation to the incorrect valuation data on the SV anyway, on the basis that the Act allows objections to be lodged in relation to any information included on, or omitted from, the roll. The municipality will then process the objection in the ordinary course, even if the property is not on the roll.

Retrospective Application

The law that presently allows retrospective application of a reduced (but not increased) property valuation decided in terms of a SV to the commencement date of the GV to which that SV relates, only came into effect on 1 July 2015. This has always been possible for amended categorisations. If a SV were opened today in relation to the 2008 GV, and a property value and categorisation changed in terms thereof, it is submitted that this would allow the amendment categorisation and reduced valuation to be retrospectively implemented to the purchase date of the property or the commencement date of the 2008 GV, whichever occurred later.

However, it is crucial to remember that any such section 78 query and subsequent objection must deal with the valuation and categorisation data published on the 2008 GV (and not the present 2013 GV).

Conclusion

It is also crucial to remember that a municipality would more than likely not want to accept disputes lodged after the “closure” of a roll, as firstly they consider it a “floodgates” issue, and secondly they probably don’t have any budget for it.

It is likely that any attempt to compel a municipality to open a fresh SV (which would be SV 12 to the 2008 GV) and include a property on it, would be met with resistance. In fact, in the authors’ opinion, it is likely that one would require a court order before a fresh SV would be opened. In this event, a court challenge could be brought either as an interdict requiring the publication of a fresh SV based on the Act, and/or as a review of the decision not to publish a fresh SV.