CITY OF JOHANNESBURG 2008 GENERAL VALUATION ROLL 12 OCTOBER 2007 Background on Valutations Roll process and compilation Presented by: Werner Sarvari Director: Valuation Services

2 Responsibilities of the Municipal Valuer in terms of the Municipal Property Rates Act: Perform a General Valuation of municipality Produce General & Supplementary Valuation rolls Receive and consider objections Provide administrative support to the Valuation Appeal Board Customer service

3 Primary Responsibility: To do a general valuation of all properties in the municipality and produce a General Valuation Roll at least once every 4 years All our other business in terms of the Act flows from this function The valuation roll is the rates base of the COJ

4 BASIS OF VALUATION MARKET VALUE (of the property as a whole)

5 MY HOUSE…

6 MY HOUSE…when I want to sell…

7 MY HOUSE…when I apply for finance…

8 MY HOUSE…when it must be valued for rates purposes…

9 What must be determined according to the Act?: Market value is the most probable price that a property would realise if sold on the open market, at the date of valuation, between a willing buyer and a willing seller TAKE NOTE…

10 What must be determined according to the Act?: Market value is most probable price Date of valuation (COJ = 1 July 2007) Willing buyer & seller must meet certain criteria and are hypothetical Open market

11 Some interesting changes in the new legislation: Physical inspection is optional Comparative and analytical methods may be used, including Computer Assisted Mass Appraisal (CAMA) systems Aerial photography may be used Use of predetermined bands is allowed Any other system may be used

12 What should be considered during the valuation process?: Individual sectional title units Land and improvements Any illegal immovable improvement Any illegal use

13 What should NOT be considered during the valuation process?: Movable improvements (use, method of fixture and intention) Improvements under the ground (mining) Plant & machinery Annual crops

14 Three most often used methods of valuation: Market (direct comparison) approach Income (indirect comparison) approach Cost approach

15 The Market Approach Primarily for residential properties Most accurate method Analysis of the market through use of sales Obtain additional information Apply market information to subject property

16 Computer Assisted Mass Appraisals CAMA is a system that uses property data to develop various models that can be applied to specific pockets of property to derive most probable values, depending on the quality (not necessarily quantity) of data (input) and the required result (output). Models can range from very simple to extremely complex.

17 The Income Approach Primarily for income producing properties, e.g. offices, flats (not sectional title), shops, factories Most accurate method where leases are involved Analysis of the market through leases (indirect comparison – i.e. income & expenditure) Obtain additional information Apply market (lease) information to subject property

18 The Cost Approach Primarily for specialised properties or where little or no market information exists, e.g. schools, churches Assumptions make this the least reliable method Analysis of the market in terms of land values, cost of reconstruction and depreciation Obtain additional information from other sources Apply market information to subject property

19 We do not inspect all properties internally We use CAMA in a basic form We make use of additional resources to obtain property data, e.g. GIS, Building Control, Property brokers, Deeds office, questionnaires, public awareness, website, etc. We apply international best practices (pre-and post completion of the roll) We comply with legislation Notes on the COJ process…

20 GV2008 PROGRESS 12/10/ % Implementation:01/07/2008 Draft roll:28/09/2007 Printing: November 07 Public awareness Sep-Dec 07 Objections Feb-Apr 08 Handover Jan 08

21 END QUESTIONS?