Scope of the Different Methods for the Valuation of Properties in Spain (II)
Spanish Order ECO/805/2003
The rules established by Spanish Order ECO/805/2003 for the valuation of real estate apply whenever the appraised value is used for any of the following purposes:
- mortgage warranties for loans that are or will be an integral part of the portfolio issued by the kind of entities described in the R. D. 685/1982, developing aspects of the Law 2/1981, about regulation of the Mortgage Market in Spain
- determination of a fair value for the purposes of the registration and second valuation standard in the Accountability Plan of insurance and reinsurance companies (R.D. 1317/2008), and determination of the valuation of assets for the purposes of the Law 20/2015, about management and supervision of insurance and reinsurance companies in Spain
- valuation of the assets of the real estate collective investment institutions regulated by the Spanish Royal Decree 1309/2005, approving the Regulation of the Law 35/2003, about Collective Investment Institutions in Spain
- valuation of the property assets of Pension Funds (R.D. 304/2004, approving the Pension Fund Regulation in Spain).
If the purpose of the valuation is among those listed above, the assessment can be made by the following technical methods:
- Method of the Cost: for the valuation of all types of buildings and building elements, whether in project phase, under construction, already finished or during a rehabilitation process
- Method of Comparison: for the valuation of all types of properties, provided that the requirements set out in Article 21 are met
- Method of Income Update: for the valuation of all kinds of properties susceptible to produce income, provided the requirements set out in Article 25 are met
- Residual Dynamic Method: for the valuation of urban or developable land, built or not, and of buildings in design phase, construction phase or during a rehabilitation process, no matter if the works are paralyzed
- Residual Static Method: for the valuation of plots and buildings during a rehabilitation process where the construction or rehabilitation works are entitled to begin within a period not exceeding one year, and also built plots.
