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ZONING:  MULTIPLE USE AND VALUATIONS

“Houses are built to live in and not to look on;

therefore let use be preferred before uniformity,
except where both may be had.”
– Francis Bacon (1561 - 1626)

SECTION 2 of the Local Government: Municipal Rates Act of 2004, allows a municipality to levy rates on property within its municipal area. Section 8 provides that it may levy different rates for different categories of rateable property according to the use of the property, its permitted use or its geographical area. Among the categories are “residential properties”, “business and commercial properties” and “properties used for multiple purposes”. Those used for business and commercial purposes attract a higher rate than those categorised for residential purposes.

In this case the property was a ten-storey building known as Park Mews. It comprised a ground floor used for business purposes and the remaining nine floors for residential purposes. Although Park Mews was zoned as a property for multiple purposes and one of its permitted uses was to have shops and offices on the ground floor, the municipal council had determined the rates payable by applying the higher business rate to the overall value of the building.

The owner filed an objection to the valuation roll, contending that there ought to have been an apportionment of the market value between the “business” and the “residential” categories. The municipal valuer rejected the objection, stating “Property category is correct. Multiple purpose.” The owner then appealed under the Act to the Valuation Appeal Board of the City of Johannesburg.

Arguing that it had elected to levy rates according to the permitted uses of properties as zoned and not on their actual use, the City applied to the High Court to review this decision.

When unsuccessful in its review, the City appealed to the Supreme Court of Appeal. It failed in that forum also where the proper approach was summed up by Judge Eric Leach:

“The inevitable conclusion is that where a property is being used for multiple permitted purposes, it is necessary for the municipal valuer compiling the valuation roll to determine and record those uses and to apportion the market value of the property between them.”

City of Johannesburg Metropolitan Municipality v. Chairman

of the Valuation Appeal Board for the City of Johannesburg and
Another [2014] 2 All SA 363 (SCA).

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Source: LawLetter: MacRobert Attorneys