New General Valuation Methodology at 01.01.2013 Values
1. VALUATION METHODS
The new General Valuation has been based on the internationally recognized valuation methods, which are used across Cyprus, i.e. the "Comparative Method," the "Development Method" and the "Cost Method". The said methods are recognized by various standards, such as the European Valuation Standards, the International Valuation Standards and the RICS Valuation - Professional Standards. The publication "Guidelines for International Mass Valuations and relevant Taxation Policy" of the International Association of Assessing Officers – IAAO has also been taken into consideration.
The correctness of the valuation methodology applied by the Department of Land and Surveys (DLS) in conducting the new general valuation at 01.01.2013 values, has been confirmed through a study undertaken by experts of the International Monetary Fund, who were assigned to the task following a request by the Department, and implemented through a Technical Support Team of the Troika. The report is dated January 2014 and bears the title: Implementation of the General Valuation for Immovable Property Tax.
2. DEFINITION OF "VALUE OF GENERAL VALUATION"
The new general valuation at 01.01. 2013 values has been carried out on the basis of the current legislation, i.e. on the basis of Part VII – Valuation of Immovable Property (Tenure Registration and Valuation) Chapter 224 of the Laws. The definition of "Value of General Valuation" and the definition of "value" are given in Article 2 of the law as follows:
"value of general valuation" in relation to immovable property ownership means the amount that arises from the conduct of a general valuation or re-evaluation or review of general valuation, which is the closest possible to the value.
"value" in connection with immovable property, means the amount which the immovable property if sold in the open market by a willing seller to a willing purchaser might be expected to realize
It should be stressed that the definition of "Value of General Valuation"
must be construed in combination with the provisions of article 69(1), whereby the Governors in Council decides that a General Valuation be carried out for the purpose of
securing an up-to-date and
uniform valuation of the immovable property. A "uniform" valuation means that a group of immovable property of similar physical and legal characteristics are expected to have a similar Value of General Valuation.
The word "uniformity" is a key one revealing the difference between a General Valuation and a specialized assessment, the latter being used for specific property and for a specific purpose.
It must be noted that the General Valuation conducted by the DLS may be used
only for taxation purposes. In the case where a land owner or other interested person needs a valuation for other purposes, such as for raising a loan, forced sale, investment, purchase or sale of real estate, then he/she should consult a specialized expert valuer, Member of the Cyprus Technical Chamber (E.T.E.K.).
3. GENERAL VALUATION PROCEDURE
The New General Valuation has been based on the
physical and legal characteristics of the immovable property as they are concisely described below:
Physical and legal characteristics of immovable property
In regard to land the following characteristics have been used:
- Type of Property
- Planning Zone
- Kind of access
- Relation to the road
In regard to buildings the following characteristics have been used:
- Type of Unit
- Area of Unit
- Year of construction
- Year of substantial renovation
- Category (luxury, etc.)
Adopting land and building value per square metre
With a view to adopting the above values, a survey and analysis have been undertaken in all geographical areas for each planning zone and type of immovable property, taking into account the following:
- Comparative Sales in recent years that are being kept in the records of the DLS, with corresponding temporal modifications where necessary.
- Internal valuations of the DLS at the material time, including all valuations undertaken in regard to state ownership on the basis of the Memorandum of Understanding provisions.
- A market survey undertaken both as regards the sale of various buildings and the construction costs per district, in cooperation with land developers, quantity surveyors and other specialists of the construction sector.
- A survey on the construction costs of buildings, carried out in cooperation with the Quantity Surveyors Sector and the Public Works Department.
- Analysis of annual statistical data of construction costs for each kind of building in the last years as published in the annual report of the Statistical Service.
- Taken into consideration were various surveys regarding market tendencies and the real estate price indices, such as those by the Central Bank and RICS Cyprus.
The General Valuation was carried out by the DLS, which is the competent state agency for the conduct of valuations for any purpose. The computer assisted mass appraisal system - CAMAS owned by the Department was utilized, preceded by all necessary analyses and market surveys. The application of similar Computer Assisted Mass Appraisal Systems is used by a number of countries worldwide, due to the advantage they offer of conducting automated mass appraisals in a very short time, thus saving time and reducing costs for the citizen.
The results of the General Valuation at 01.01.2013 values have been assessed by competent officers of the Department in respect of price uniformity and fluctuation, taking into account the current state of the real estate market. The DLS has done its best to ensure that the Values of the General Valuation at 01.01.2013 values that have been assessed are uniform and close to the market value.
FREQUENTLY ASKED QUESTIONS