Tuesday, 8 April 2014

Weightings for the Cadastral Valuation of Land and Buildings in Spain

Weightings for the Valuation of Land and Buildings in Spain

Appreciation, Depreciation and Compatibility

Properties have certain characteristics that affect both the land and the building, so the weightings related to those characteristics should be applied to the value of both. These coefficients are:
  • coefficient J: functional depreciation or inadequacy, applicable in cases of improper construction, design, installation or use (0.80)
  • coefficient K: dwellings and shops considered interior, applicable in cases where all windows are located around courtyards (0.75)
  • coefficient L: properties affected by singular conditions, such as being part of officially declared historical or artistic environments, or being included in special protection planning, applicable unless the complete demolition is allowed (0.70 for total protection, 0.80 for structural protection, or 0.90 for environmental protection)
  • coefficient M: properties affected by extrinsic special situations, such as future roads, lack in urban planning definition, expropriation, land subdivision or compensation procedures, or out-of-planning building use, applicable while such situations persist, which must be justified every year (0.80 unless the special situation has already been taken into account in the Statement of Values)
  • coefficient N: economic depreciation or appreciation, applicable only when justified in the Statement of Values, and only if approved by the Technical Territorial Board of Urban Properties Coordination (between 1 and 1.8 for apprecitation situations, and 1 in depreciation situations).

The scope of the coefficients must be defined in the Statement of Values. If two or more coefficients appear to be applicable, only one will be allowed, unless one of them is J or N, which are compatible between them and with any other. In any other concurrency case, the coefficient to select will be the one which causes greater decrease in value. While valuating undeveloped land and in cases of land valuation using unit values, the application of coefficient M is incompatible with the application of coeficient F (temporary building prohibition).

The coefficient of economic depreciation of appreciation

Coefficient N, of economic appreciation or depreciation, is applied to adapt the results to the reality of the real estate market, by assessing over-pricing or under-pricing cases within certain specific areas, which can be defined by considering building types or building uses. Over-pricing cases can be caused by:
  • high demand
  • absence of similar products
  • high quality construction features.

And under-pricing cases can be caused by:
  • low demand
  • product obsolescence.

Coefficient N can be applied in order to meet different market situations within a single property. It's compatible with any other coefficient which may be considered applicable to the property.
Property Valuation Reports in Spain

Daniel Trujillano, Architect

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