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Chapter 13

The document discusses the concept of valuation, which is the technique of assessing the fair value of property based on various factors such as structure, location, and maintenance. It outlines the purpose of valuation, principles, factors affecting property value, terms used in valuation, methods of valuation, and the qualifications required for valuers. Additionally, it emphasizes the importance of valuation in property transactions, taxation, and financial reporting.

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Prashant Rai
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4 views11 pages

Chapter 13

The document discusses the concept of valuation, which is the technique of assessing the fair value of property based on various factors such as structure, location, and maintenance. It outlines the purpose of valuation, principles, factors affecting property value, terms used in valuation, methods of valuation, and the qualifications required for valuers. Additionally, it emphasizes the importance of valuation in property transactions, taxation, and financial reporting.

Uploaded by

Prashant Rai
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter: 13

Valuation
-Subodh Sharma Gautam
(NEC 6367 Civil “A”)
MSc Urban Planning, MBA Finance, BE Civil
Valuation
• technique of assessing the present fair value of
the property

• art of determining actual unbiased, legal and


logical value of the property

Note: value of the property depends upon its structure, life


span, location, maintenance etc
Cost and Value
• Cost:
– Cost is the original cost and the original cost may
be either construction cost or a purchase cost.
• Value:
– Value means the present (current) salable value of
the property.

Note: Value may either less than or greater than the cost
Purpose of Valuation
– Buying and selling of property
– Taxation (local bodies tax , property tax and wealth
tax)
– Rent fixation
– Security for loan or mortgage
– Compulsory acquisition
– For insurance
– To determine the court fee
– To prepare the balance sheet of company
– Partition of the property
– Reinstatement (to get the original value)
Principle of valuation
• Costs depends upon supply and demand
• Costs depends upon its design, specification and
location
• Costs varies with the purpose
• Costs depends upon age and condition of property
• Costs depends upon the psychology of the buyer and
seller
• Depends upon the present and future use of the
property
• Costs analysis must depends upon the statistical data
Factors affecting the value of the property

– Location
– Climatic condition
– Population census
– Supply and demand function
– Rate of interest
– Topography
– Rent restriction act
– Security on capital
– Abnormal condition
– Purpose
Terms used in Valuation (value classification)
• Gross income
• Net income
• Outgoings
• Book Value
• Salvage Value
• Scrap Value
• Distress value
• Monopoly Value
• Assessed value
• Speculative Value
• Obsolescence
• Leasehold property
• Freehold Property
• Capital Cost:
• Capitalized Value
• Years Purchase(Yp)
Various Methods of Valuation
• Cost based method of valuation
• Depreciation method
• Plinth area method
• Rental method
• Profit based method
• Capital value comparison method
• Development method
Valuation Report Writing
• It consist of three parts
– Part I
• Deals with all details about property
– Part II
• Calculations and final value as curtained by valuator
– Part III
• Valuator’s declaration
Qualification of Valuers
• Knowledge of surveying, levelling planning,
designing, and construction works
• Knowledge of estimation and quantity
surveying, market rate of land, interest rate,
rent act and prevailing acts and regulations
• Knowledge of building codes and bye-laws
• Knowledge of vastu science
• Report writing skill and computer skill
[Link]
[Link]
subodhsharmagautam@[Link] +977-9851140360

2/10/2024 SS Gautam (6367 Civil "A"), IOE, TU 11

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