Annual Assessment a Necessary Evil

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By Fathol Zaman Bukhari

There are instances where owners have to pay more than what is usually billed. This has caused much misunderstanding, especially among those who are unfamiliar with regulations pertaining to assessment…

One inherent problem faced by property owners in Ipoh (and world-wide) is paying bills. They come with varying degrees of priority. There are bills which have to be settled immediately and there are those that provide some flexibility in payment. You have to pay your utility bills before the expiry dates mentioned unless you are prepared to live in darkness and without water to bathe or cook. Worse still, you may have to forego your favourite TV programmes. You can still tune in to the radio, as it can work on dry batteries but how far can you go without the luxury of tweeting and chatting online continuously? Modern amenities have increased our dependence on electricity without which we are as good as gone. And this is one fact we can neither dismiss nor deny.

One other bill-related problem which affects property owners in Ipoh annually is assessment. The common grouse among rate-payers is the 16 percentage levy formulated by City Council as the basis for the calculation of assessment of properties. Most are of the view that Ipoh’s rate is the highest in the country. Residents of Petaling Jaya pay less, as their rate is not calculated at 16 per cent but 10 per cent! Why is Ipoh’s rate so high?

Before I answer that let us see the quantum fixed by MBI on properties within the city:

Mining land – 2 per cent.
Agricultural land – 6 per cent.
Properties on traditional kampong – 5 per cent.
Properties in new village and planned village – 8 per cent.
Industrial properties – 10 per cent.
Flats/apartments/condominiums – 10 per cent.
Properties in the city and housing estates – 16 per cent.

Most of us are in the 16 per cent bracket, less for the fortunate few who live in flats, apartments and condominiums. Their reason for a reduction, which was approved in 2010, is valid as they have to pay monthly maintenance fees to upkeep their properties.

The authority to fix the rate is with the state government, pursuant to Local Government Act 1976. The rates mentioned above, with the exception of those for flats/apartments/condominiums, have been in force since 1981. City Council has made several applications for an increase but was turned down each time.

The 16 per cent charged to house owners within city limits is 16 per cent of the annual rent obtainable from the property. Example, if the rent rate of your terrace house in Bercham is RM350 a month, the assessment rate you have to pay will be 16 per cent of RM350 x 12 months = RM672. The rate for empty land is calculated based on the market value of the land.

In spite of the foregoing, there are instances where owners have to pay more than what is usually billed. This has caused much misunderstanding, especially among those who are unfamiliar with regulations pertaining to assessment. When owners develop their empty land or extend their properties they have to pay a different rate than they have previously. This is to be expected, as the aggregate value of their properties has increased, exponentially.

Illegal extension is a bane of the council. Many house owners prefer to make unauthorised extensions so as to avoid paying the council. “This is not wise,” said Burhanuddin Maamor from the Department of Valuation and Property Management MBI at a media briefing recently. “The council adopts a conciliatory rather than a confrontational approach in dealing with the matter,” he added. So there is still recourse to resolve your problem should you, unwittingly, contravene the council’s by-laws. “Own up,” Burhanuddin advised. “Don’t hide.”

The council charges a RM200 fee to process an extension application. A small sum to pay, considering the hefty fine imposed if you are caught breaking the law. The council is at liberty to destroy the extension and fine the owner for the infringement.

We ought to remember that over 70 per cent of the council’s income comes from assessment. MBI needs the money to develop the city. Therefore, it is important that we pay our dues on time.

For those with queries on your annual assessment please visit the Department of Valuation and Property Management on the 4th Floor of the MBI building. Burhanuddin can be contacted at 05-2083318. He is one affable officer unlike the impression most have of council’s officers, especially those in positions of authority.

1 thought on “Annual Assessment a Necessary Evil

  1. Most of the people’s complaints against higher assessment are seldom the higher valuation after vacant land properties are developed but rather how DBI could suddenly come up with higher valuation on properties when rental and property sale values have remained the same. DBI must explain how their evaluations are computed and derived from, not simply and arbitrarily increase the evaluations.

    For example, did DBI collate rental data within the areas concerned from property agencies to determine if rental rates have actually gone up? Perhaps rental rates might actually have gone down instead. In which case, would DBI reduce the assessment amount imposed?

    The main reasons that property owners don’t submit plans for home extensions are the hassle and long time it takes to get the plans approve. The RM200 is not really the issue. DBI should make it easy for property owners to improve their properties since the increase on the value of the properties could result in higher assessment revenue for DBI.

    Annual assessment is not really seen as a necessary evil. Property owners understood that the local council need funds for development and assessment is the primary revenue. The core complaints are how assessments could suddenly increase from the previous year without reasonable explanation from DBI and how Ipoh could have higher assessment values than other cities and yet under-developed compared to them.

    From being compared to KL and Penang in the 70’s, Ipoh now even lags behind Seremban and Melaka. Ipoh is only better than Alor Setar on the West coast. Ipoh has regressed despite property owners paying high assessments. DBI has to answer.

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