Mr Lim and Ms Teresa are the owners of a bungalow house in Taman Seputeh, Kuala Lumpur. Recently, they received a letter from Kuala Lumpur Town City Hall (“DBKL”) namely, Notice of Revision of the Valuation List. When they received the notice, they are flabbergasted, thinking they are required to pay up to a “proposed annual value” of RM36,000.00 (as shown in the sample letter above). Is it true? What can they do?
“Annual value” is defined in Local Government Act 1971 (“LGA”) as “the estimated gross annual rent at which the holding might reasonably be expected to let from year to year the landlord paying the expenses of repair, insurance, maintenance or upkeep and all public rates and taxes“, excluding from the value of the holding, among other matters, “the enhanced value given to the holding from the presence of” “machinery used for the making of any article or part of an article, the altering, repairing, ornamenting or finishing of any article or adapting for sale of any article” and “Holding” here means any lands with or without the buildings thereon.
The concept behind this definition is of a hypothetical landlord renting out the land and buildings to a hypothetical tenant who makes use of the land and buildings.
In fact, the amount of assessment payable per annum is based on the formula below:-
Proposed Annual Value X Rate of Assessment = Assessment payable per annum
Pursuant to section 142(1) of LGA, whoever disagrees with the Proposed Annual Value may lodge an objection in writing to the Property Management and Valuation Department of DBKL on or before 17.12.2013 on the ground that any land or building which is rateable is valued beyond its rateable value.
However, the Rate of Assessment shall be determined and announced annually by the mayor of DBKL vide Consolidated Annual Rates for Federal Territory of Kuala Lumpur. Currently, the Rate of Assessment is determined based on the types of buildings and its identified usage. It has been the rule of thumbs that the Rate of Assessment for residential property is at approximately 6%.
In other words, don’t worry if you receive such a letter from DBKL. You are not required to pay the Proposed Annual Value but rather a percentage of the Proposed Annual Value of which the rate shall be determined by the DBKL from time to time.
So, how much did you know about this Legal Myth?
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