Chris Fick & Associates

A2blMunicipalities may levy rates on properties by valuing them and then applying a rate to them based on categories of permitted or actual usage, with “residential” properties traditionally attracting lower rates than “commercial”, “business” and “industrial” properties.

What happens though when you own a mixed use property?

Property owners will welcome a recent Supreme Court of Appeal ruling in a dispute around the rates levied on a 10 storey building zoned and used for multiple permitted uses, and which had 9 residential floors above some shops on the ground floor.

The municipality’s rates policy allowed it to levy rates according to “permitted” usage, and it accordingly levied rates on the total valuation of the building under its higher “business” rate without making allowance for the actual residential usage of much of the building.

The Court, confirming that the Valuation Appeal Board had been correct to change that and rather make an apportionment of the building valuation, held that:

  1. Where a property is being used for “multiple permitted purposes”, the municipal valuer must categorise the various uses and apportion the market value of the property between them,
  1. The municipality must then apply the tariffs for those categories to the apportioned values.

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