What Cape Town property owners should learn from Johannesburg valuation hikes – experts
Cape Town property owners can learn from other regions like Johannesburg, where, earlier this year, residents were faced with property valuation increases – some ranging from 60% to 500%.
“Doing your homework now could make a real difference. Unwelcome surprises could have a very negative impact. If you don’t arm yourself with information now, you will struggle to defend your position next year. More importantly, you will be living with the consequences for the next four years,” says Gary Palmer, CEO of Paragon Lending Solutions.
The municipal valuation increases in Johannesburg come into effect in July this year. They are expected to impact monthly rates bills, influencing the cost of services such as water, refuse removal and electricity.
“The logical knock-on effect of municipal rate increases is to raise the rentals on investment properties. If this is not possible, the owner’s net profit will decrease.
“The value of the property is also impacted in the eyes of lenders, who look closely at the net income of the property when determining the value of their security,” explains Palmer.
“For owners hoping to use their property to raise capital for their business, municipal rates spikes – such as we have seen – can be a very serious obstacle in the path of their capital raising plans.”
Source: fin24.com