Surprising as this may seem to many people, it is still true that the majority of people who buy homes do so without even asking what the municipal rates and taxes are for the property.
This ignorance is usually not a problem in lower priced properties where levies are low but it can cause serious difficulties for those buying in the higher priced brackets, where the recent new valuations may well result in the payments being significantly higher when they are raised in July.
Home buyers making an offer in the next three months may find that the old valuations on which their property’s rates and taxes were estimated has jumped up to two or three times its previous level, as a result of improvements having being made in the home since the last valuation.
As I see it, it is the duty of the sellers and estate agents to warn prospective buyers that higher rates are likely to be charged – but I suspect that the subject is often deliberately avoided.
When an upmarket property is concerned, a home’s revaluation can result in the property’s monthly rates bill increasing from R4,500 to R13,000, depending on the new rates.
That is obviously an extreme case. However, there will be many homes where the increase will be 20 to 30% and where the new buyer will not have budgeted for this.
In some instances, the current owners will query the evaluations but this process can take months to reach a conclusion. Again, however, the sellers should divulge all information on what is happening to the prospective buyers and explain just how much they believe the property’s value has grown.