Scope of the Valuation Methods in Spain (I)

Scope of the Different Methods for the Valuation of Properties in Spain (I)

R. D. 1020/1993 and R. D. 1492/2011

The primary purpose of the Spanish Royal Decree 1020/1993, about Valuation Rules and Value Frame for Land and Construction, is the determination of the Cadastral Value of urban properties, whose data constitute the Spanish Urban Real Estate Cadastre. Moreover, the Spanish Law 58/2003, about General Taxes, states that the value of the real estate affected by tax obligations can be checked by the Administration using the values ​​established by the Real Estate Cadastre, by applying the multiplier coefficients determined by competent tax authorities, as established by regulation. For all the above, the technical standards of valuation expressed in Royal Decree 1020/1993 apply for the following purposes:

• determination of the Cadastral Value of any urban real estate
• determination of the tax base in the tax about Property Transfer and Documented Legal Acts
• liquidation of the taxable events of the tax about Successions and Donations.

Spanish Royal Decree 1492/2011

The Spanish Royal Decree 1492/2011, about the Valuation Rules of the Spanish Land Act, applies to the valuation of land, facilities, buildings and constructions, and of rights made in connection therewith, whenever the final purpose is one of the following:

• checking the sharing of benefits and burdens, or other operations required by the implementation of the territorial and urban planning in which the valuation delimits the financial content of powers or duties associated with the right to property, in the absence of agreement among all affected subjects
• determination of fair compensations in expropriations, regardless of the purpose and the laws governing the process
• determination of the amount payable to the owner in cases of forced sale or substitution
• determination of the financial guarantee of a Public Administration.

Rules for the Valuation of Properties According ECO/805/2003 (VII)

Valuation Rules According ECO/805/2003 (VII)

General Warnings

According Spanish ECO/805/2003, we find a ‘warning case’ whenever we have doubts about any of the data used in the calculation of the technical values. At a minimum, we should consider the following cases:

• when there is a discrepancy between the physical reality of the property and its description in the Property Registry or the Cadastre, if such discrepancy does not lead to doubt about the identification and do not affect the calculated values
• when the property is not in accordance with the applicable urban planning, unless some conditioning have been stated or it was not possible to verify the system of protection of the architectural heritage
• when the valued property is subject to expropriation or was constructed on the basis of a license or an administrative authorization containing conditions, which if not met, may result in changes to the certified value
• when the valuation has been calculated using different methods than those stated in Spanish Order ECO/805/2003
• when the maximum legal value was calculated in absence of some of the required documents
• when the valuation was calculated in absence of the necessary documents to calculate cash flows
• in rural properties, when the valuation was calculated in absence of the cadastral documentation or the documents describing the operating system
• in the valuation of buildings under construction or rehabilitation for the finished building hypothesis, when the valuation was calculated in absence of a complete set of the Construction Documents already endorsed by the Architects’ Association, or the final certification of the performed work, or the Building Contract, or the Schedule of Construction Costs
• in buildings whose main use is housing, when the valuation was calculated in absence of the document attesting the expedition of the decennial insurance for property damage
• in buildings in horizontal property regime or building elements different than houses or garages, when the valuation was calculated in absence of the statutes of the homeowners, an equivalent document or a Certificate by the community manager, certifying the limitations of use or other circumstances able to affect the value
• when the Cadastral Reference does not exist or can not be known by the means provided in the revised text of the Law on Real Estate Cadastre, or through the Virtual Office of the Cadastre
• in properties located abroad, when the valuation was calculated in the absence of all the documentation that, in accordance with the rules applicable in the country where the property is located, may have some influence on the value of the property.

Value Module M for Cadastral Valuations in Spain

Module M for Determining the Value of Properties in Spain

M, MBR and MBC Modules

The revised text of the Spanish Law of Cadastre (R.D.L. 1/2004) provides that the determination of the Cadastral Value should take into account the market circumstances and values, which cannot be exceeded. One of the instruments that allow the correlation between Cadastral Value and Market Value is the Value Module M. This module must collect the variations experimented over time by the Market Value of the urban real estate, according to the market analysis performed by the General Directorate of Cadastre.

Current Value of Module M

The value of the Module M that is considered current is still the one set by the Order EHA/1213/2005, which established 1,000 Euros per square meter.

Current Values of MBR and MBC Modules

The application of factors for the diversification of the land and the construction results in the MBR and MBC Modules. The Circular 01.04/14/P of the General Directorate of Cadastre established, for the year 2014, Impact Values ranging from 25 Euros per square meter, corresponding to the MBR-6 and MBR-7, to 3,886 Euros per square meter, corresponding to the MBR-1. The current values for the module MBC were determined in Circular 01.04/08, which assigned a construction value ranging between 400 Euros per square meter, corresponding to MBC-7, to 700 Euros per square meter, corresponding to MBC-1. The MBR and MBC Modules apply to Statement of Values affecting all the urban properties of the municipality, and also to any subsequent partial Statement.

Architect Daniel Trujillano
http://www.arquitectotrujillano.com/valuation/home.html
Valuation Reports for Buildings in Spain