How To Perform Valuation Of Land And Property? |2021|

FACTOR AFFECTING VALUATION OF LAND

1.Location

As they are saying, in property, its location, location and placement. the largest think about land valuation is that the location of land. Land in AN populated area is dearer than rural land, price of land in central city is on top of the land in outskirts.

2.Usage

A commercial land is a lot of valuable than residential or industrial land. Similarly, residential and industrial lands square measure a lot of valuable than agricultural land. Hence, it’s necessary to work out the usage of land to guage its value.

3.Size

Smaller residential plot sizes typically fetch higher per unit rate as compared to larger plots owing to affordability reasons. However, if the land may be used for industrial or business functions, larger plot sizes might command a premium.

4.Shape

Generally, sq. or rectangular plots square measure most well-liked over irregular shapes. Hence, regular formed plots of land command higher costs.

effect-of-shape-of-land ,valuation of land

5.Level

If the extent of land is on top of the adjacent road, it’ll be troublesome to get water & evacuation lines. additional earth has got to be excavated to form the plot at cheap level. Similarly, if the land is significantly under the road level, substantial price are going to be incurred in land filling. whereas valuing a chunk of land, you must confine mind all such levelling prices.

6.Come back Frontage

A plot with multiple frontages commands premium over a plot with single frontage. For eg. a corner plot or a 3 facet open plot are going to be priced on top of a plot with just one facet receptive road.

7.Accessibility

The value of land conjointly depends on its accessibility. If a plot of land is land barred or if the slip road isn’t wide enough, it’ll fetch abundant lower costs.

8.Floor house Index (FSI)

This factor is very important in the valuation of land. The floor house Index is that the magnitude relation of designed up space to the realm of land. the worth of land conjointly depends on FSI or in alternative words on the entire floor space of the building that may be designed on the plot.

9.Infrastructure & Development

The infrastructure & development within the neighborhood of land have direct concerning costs. A well-developed space that has faculties, hospitals, wide roads, metro, 24X7 water system & power can naturally fetch higher costs.

10.Nature of Soil

The bearing capability of soil conjointly affects the land valuation. If the soil bearing capability is nice, price of foundation are going to be cheap. However, the value of foundation will go up considerably if the soil bearing capability is poor. Hence, land with sensible soil bearing capability are going to be priced higher.

11.Vastu

Many people in Republic of India believe Vastu Shastra. North facing and East facing plots command premium over West facing and South facing plots.

VALUATION OF LAND

valuation of land may be done by any one of the following three methods.

1. Comparative method.

This is the simplest and most direct method of valuation. The value is fixed by direct comparison. This method is based on the instances of other sales of similar Lands in the neighborhood.

The following factors are effecting in this method of valuation of land:

(a) Sale prices should be recent so that there is no rise in value of land during the intervening period.

(b) This method is based on comparison but properties are always unique so that some adjustments may be required to arrive at the proper value.

This method is based on the fact that the valuation of land has a great bearing on its road frontage. Frontage land has greater value than back land. In this method, the plot is divided into three belts by lines running parallel to the centerline of the road

2. Belting method of valuation

The width of the front belt is judicially ascertained. Then a relationship regarding the value and depth of each bell to the front belt is fixed up. The rate/sq m of the land of the first belt is fixed up and the rate for the other belts worked out correspondingly.

Below video shows methods of valuation of land…

Multiplying the area of each belt with its value and summing all the values will yield the value of plot TBR. SBR and FBR are the recessed lands of the III, II and I belts respectively. Those land will be having a slightly lesser value than the other land in their respective belts.

3. Hypothetical building scheme

In this method, the value of a vacant plot of land is estimated by capitalizing the assumed net income that may be obtained from a building, which can be erected on the landless expenditure for development.

VALUATION OF PROPERTIES

Valuation of a property may be prepared by different methods like…

(a) Rental method of valuation

(b) Land and building method of valuation

(d) Project based valuation

(e) Development method of valuation

the appropriate method of valuation depends on the nature of the property as well as the availability of reliable data. In valuation, it is customary to check one method by another method.

1. Rental method of valuation

In this method, the net rental income is calculated after deduction of all outgoings from the gross rent, and the year’s purchase is calculated after adopting the current bank interest. Then validation of a property is worked out by multiplying the net rental income by the year’s purchase.

Net rent = gross rent – outgoings

Capitalised value=net rent x years purchase

When the rent has been proved and is likely to be maintained for many years to come, then the rental method of valuation is most suitable for determining the value of the property. This method is very suitable for a property with a new building.

The main disadvantage of this method is :

If the actual rent is not fair rent, then it cannot be relied upon.
A Property of land and building valued together cannot be proportioned later.
The calculation of outgoings is often different.

2. Land and Building method of valuation

The main principle of this method is to determine the individual market value of land and the depreciated value of buildings. The sum of these two figures gives the value of the property.

The method is most suitable for properties which are used for special purposes like schools, police stations or which perform non-profitable community function where there is no evidence of income variation. Valuation of under-developed, owner-occupied, or vacant possession properties may also be done by this method.

The value of the land may be determined by any of the three methods already discussed. The value of the building is done by deducting the depreciation from the prime cost of the building.

3. Direct comparison method.

In this method, the valuation of a property is done by direct comparison with the capitalized value of a few adjoining properties. This method is suitable when the particulars of sale of a few adjoining properties are available. The properties to which the comparison is made should be similar, transactions are to be new and normal and all the details available.

The method is suitable where it is not possible to know the fair rent like owner-occupied properties, as well as schools, clubs and out homes, etc.

4. Profit based valuation

This method is similar to the rental method. In this method, the net income from the property is ascertained by deducting all the outgoings from the gross income. The year’s purchase is calculated from the interest offered by banks. The product of the net income and the year’s purchase gives the capitalized value of the property. This method is suitable for the valuation of hotels, shops, cinemas, etc.

Net income = Gross income- outgoings

Capitalised value = Net income x Year’s purchase

5. Development method of valuation

This method is useful for the valuation of the undeveloped or underdeveloped property. The valuation is done under the assumption that the property is to developed and sold off at a much higher price than the price of the underdeveloped property. In this method, the value of the property is arrived at by deducting from, the value of the proper after development, all the outgoings like development cost, supervision charges, developer profit, etc.

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How To Perform Valuation of Land And Property? |2021|