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Valuation
WELCOME
LAND
ACQUISITION
BEFORE AMENDMENT
ART 31: COMPULSORY ACQUISITION OF PROPERTY.
1] NO PERSON SHALL BE DEPRIVED OF HIS PROPERTY SAVE
BY AUTHORITY OF LAW.
2] NO PROPERTY MOVABLE OR IMMOVABLE,INCLUDING ANY
INTEREST IN, OR IN ANY COMPANY OWNING, ANY
COMMERCIAL OR INDUSTRIAL UNDERTAKING SHALL BE
TAKEN POSSESSION OF OR ACQUIRED FOR PUBLIC
PURPOSES UNDER ANY LAW AUTHORISING THE TAKING OF
SUCH POSSESSION OR SUCH ACQUISITION, UNLESS THE
LAW PROVIDES FOR COMPENSATION FOR THE PROPERTY
TAKEN POSSESSION OF OR ACQUIRED AND EITHER FIXES
THE AMOUNT OF THE COMPENSATION OR SPECIFIES THE
PRINCIPLES ON WHICH & THE MANNER IN WHICH
COMPENSATION IS TO BE DETERMINED AND GIVEN.
AFTER AMENDMENT
ART.31: COMPULSORY ACQUISITION OF PROPERTY.
1] NO PERSON SHALL BE DEPRIVED OF HIS PROPERTY
SAVE BY AUTHORITY OF LAW.
2] NO PROPERTY SHALL BE COMPULSORILY ACQUIRED
OR REQUISITIONED SAVE FOR A PUBLIC PURPOSE &
SAVE BY AUTHORITY OF A LAW WHICH PROVIDES FOR
ACQUISITION OR REQUISITION OF THE PROPERTY FOR
AN AMOUNT WHICH MAY BE FIXED BY SUCH LAW OR
WHICH MAY BE DETERMINED IN ACCORDANCE WITH
SUCH PRINCIPLES & GIVEN IN SUCH MANNER AS MAY
BE SPECIFIED IN SUCH LAW; AND NO SUCH LAW SHALL
BE CALLED IN QUESTION IN ANY COURT ON THE
GROUND THAT THE AMOUNT SO FIXED OR DETERMINED
IS NOT ADEQUATE OR THAT THE WHOLE OR ANY PART
OF SUCH AMOUNT IS TO BE GIVEN OTHERWISE THAN IN
CASH.
MATTERS TO BE CONSIDERED
IN DETERMINING
COMPENSATION
IN DETERMINING THE AMOUNT OF
COMPENSATION TO BE AWARDED FOR LAND
ACQUIRED UNDER THIS ACT, THE COURT SHALL
TAKE INTO CONSIDERATION.
FIRST, THE MARKET VALUE OF THE LAND AT
THE DATE OF PUBLICATION OF THE
NOTIFICATION U/S 4 SUB-SECTION (1),
SECONDLY, THE DAMAGE SUSTAINED BY THE
PERSON INTERESTED, BY REASON OF THE
TAKING OF ANY STANDING CROPS OR TREES
WHICH MAY BE ON THE LAND AT THE TIME OF
THE COLLECTORS TAKING POSSESSION
THEREOF,
MATTERS TO BE CONSIDERED
IN DETERMINING
COMPENSATION
THIRDLY, THE DAMAGE (IF ANY) SUSTAINED BY THE
PERSON INTERESTED AT THE TIME OF THE
COLLECTORS TAKING POSSESSION OF THE LAND, BY
REASON OF SEVERING SUCH LAND FROM HIS OTHER
LAND,
FOURTHLY, THE DAMAGE (IF ANY) SUSTAINED BY THE
PERSON INTERESTED AT THE TIME OF THE
COLLECTORS TAKING POSSESSION OF THE LAND BY
REASON OF THE ACQUISITION INJURIOUSLY AFFECTING
HIS OTHER PROPERTY MOVABLE OR IMMOVABLE, IN ANY
OTHER MANNER OF HIS EARNINGS,
MATTERS TO BE CONSIDERED
IN DETERMINING
COMPENSATION
MATTERS TO BE NEGLECTED
IN DETERMINING
COMPENSATION
FIRST, THE DEGREE OF URGENCY WHICH HAS LED TO
THE ACQUISITION,
SECONDLY, ANY DISINCLINATION OF THE PERSON
INTERESTED TO PART WITH THE LAND ACQUIRED,
THIRDLY, ANY DAMAGE SUSTAINED BY HIM WHICH,IF
CAUSED BY A PRIVATE PERSON WOULD NOT RENDER
SUCH PERSON LIABLE TO A SUIT,
FOURTHLY, ANY DAMAGE, WHICH IS LIKELY TO BE
CAUSED TO THE LAND ACQUIRED, AFTER THE DATE OF
THE PUBLICATION OF THE DECLARATION U/S 6, BY OR IN
CONSEQUENCE OF THE USE TO WHICH IT WILL BE PUT,
MATTERS TO BE NEGLECTED
IN DETERMINING
COMPENSATION
FIFTHLY, ANY INCREASE TO THE VALUE OF THE LAND
ACQUIRED, LIKELY TO ACCRUE FROM THE USE TO
WHICH IT WILL BE PUT WHEN ACQUIRED,
SIXTHLY, ANY INCREASE TO THE VALUE OF THE OTHER
LAND OF THE PERSONS INTERESTED LIKELY TO ACCRUE
FROM THE USE TO WHICH THE LAND ACQUIRED WILL BE
PUT, OR,
SEVENTHLY, ANY OUTLAY OR IMPROVEMENTS ON OR
DISPOSAL OF THE LAND ACQUIRED,COMMENCED, MADE
OR EFFECTED WITHOUT THE SANCTION OF THE
COLLECTOR AFTER THE DATE OF THE PUBLICATION OF
THE NOTIFICATION UNDER SECTION 4, SUB-SECTION (1).
MATTERS TO BE CONSIDERED IN
DETERMINING COMPENSATION
IN DETERMINING THE AMOUNT OF
COMPENSATION TO BE AWARDED FOR
LAND ACQUIRED UNDER SECTION 23 OF
THE LAND ACQUISITION ACT, 1894, THE
COURT SHALL TAKE INTO
CONSIDERATION.
THE MARKET VALUE OF THE LAND AT
THE DATE OF PUBLICATION OF THE
NOTIFICATION U/S 4 SUB-SECTION (1).
VALUATION
OF
IMMOVABLE
PROPERTY
DEFINITION OF MARKET
VALUE
VALUATION
OF IMMOVABLE PROPERTIES
PROPERTY: - Right to own and possess and
to put to Legal and possible
uses.
- Land together with building
improvements plus anything
permanently affixed to it.
IMMOVABLE: Land + Anything attached to
it
+ Anything embedded in it.
VALUATION: For highest, best and most
profitable legal use.
VALUE
Result of Interaction of Demand and supply.
Value is not intrinsic in Object. People create
Value.
Individual / Subjective Value.
Market / Objective Value.
CHARACTERISTICS OF
VALUE
FUNDAMENTAL PRINCIPLE OF ECONOMICS IS
THAT,FOR AN OBJECT TO HAVE VALUE. IT MUST
SATISFY FOLLOWING BASIC CONDITIONS
UTILITY The power to render a service or fill a need.
SCARCITY in relation to supply and demand and
possible alternative uses.
DEMAND Need with monetary power to fill demand.
TRANSFERABILITY Rights of possession and control
of ownership of property.
VALUATION
It is an art or science of estimating the value
for a specific purpose of a particular interest
in property at a particular moment in time
taking into account all features of the
property and considering all factors of the
market.
PURPOSE OF VALUATION
INTERESTS IN LANDED
PROPERTY
1]
2]
3]
4]
6]
7]
8]
FREEHOLD INTEREST.
LEASEHOLD INTEREST.
SUBLEASEHOLD INTEREST.
LIFE INTEREST.
RIGHTS OF OCCUPANCY.
RIGHT OF WAY.
RIGHT OF LIGHT AND VENTILATION.
Location
Situation
User
Residential/Industrial/Commercial
Size Small/Gross
Shape Regular/Irregular
F.S.I. permissible
Road Frontage Small/Large,
Important Road/Local
Road
FACTORS OF MARKET
METHODS OF VALUATION
1] THE DIRECT COMPARISON OR
COMPARATIVE METHOD.
2] THE CONTRACTORS METHOD.
3] THE PROFITS OR ACCOUNTS
METHOD.
4] THE RESIDUAL METHOD.
5] THE INVESTMENT METHOD.
COMPARATIVE METHOD
FIND OUT CONSIDERATION ACTUALLY PAID FOR OTHER SIMILAR
PROPERTIES IN THE SAME LOCALITY AND THREE TO FIVE
YEARS PRIOR TO THE DATE OF VALUATION.
FACTORS TO BE TAKEN INTO CONSIDERATION:
1] LOCATION OF PROPERTY.
2] SITUATION.
3] LEVEL OF AMENITIES & FACILITIES.
4] USER OF PROPERTY.
5] AGE OF PROPERTY.
6] CONDITION OF PROPERTY.
7] FACILITES AVAILABLE IN THE PROPERTY.
8] SIZE (FLOOR AREA) OF PROPERTY.
COMPARATIVE
METHOD.
The evidence
The
Evidence
The Market
Market
The
Should be based
on
Transactions
Transactions
ofof
similar
similar
properties
properties
Comparative
COMPARATIVE
Valuation
VALUATION
Should
Should be
be
fairly stable
stable
Fairly
thesame
samearea
area
InINthe
Obtained from
RecentRecords
Records
Recent
of
Frequent
Frequent
transactions
Transactions
Underlying
Underlying
economic
Economic
factorsshould
should
Factors
be
Bestudied
studied
Belting Method
Belting Method
3rd Belt
Remaining
Value
Of 1st Belt
Recess Land
of Belt
Value
Recess Land
of Belt
Value
2nd Belt
1
X
1st Belt
R O A D
3/4th Value
Of 1st Belt
Full Value
CONSIDERATION FOR
DIFFERENT
LANDS
Land with return frontage :- Give positive
allowance depending on the importance of road
on which return frontage.
Land with irregular shape :- Carve out regular
shape by drawing perpendiculars to road and give
negative allowance to remaining land.
THANK YOU
CONTRACTORS METHOD
OR CAPITAL VALUE METHOD.
CONTRACTORS METHOD
METHOD
1] ESTIMATE VALUE OF LAND IN ITS
EXISTING USE.
2] ESTIMATE COST OF CONSTRUCTION
OF BUILDING.
3] ALLOW FOR DEPRECIATION ON
ACCOUNT OF AGE,OBSOLESANCE ETC.
4] CAPITAL VALUE = LAND VALUE PLUS
DEPRECIATED COST OF BUILDING
CONTRACTORS METHOD
1.
2.
3.
Contractors Method
Depreciation
Contractors Method
Depreciation
3. Sinking Fund Method
CONTRACTORS METHOD
1.
2.
3.
4.
5.
6.
Weakness of Contractors
Method
No direct co-relation between cost
of property and Market value,
which depends on forces of supply
and demand.
Requires assumptions relative to
unit costs. More probability of
assumption being wrong.
Requires assumptions as to original
economic life and/or remaining
economic life. Greater probability
of assumptions being in error.
PROFIT METHOD
PROFITS MADE BY AN OCCUPIER DETERMINES THE RENT A
TENANT WOULD BE WILLING TO PAY FOR HIRING THE PREMISES.
METHOD.
1] ESTIMATE THE GROSS AVERAGE RECEIPTS OF THE OCCUPIER.
2] DEDUCT THE EXPENSES INCURRED FOR EARNING THOSE
RECEIPTS.
3] DEDUCT THE TENANTS SHARE OF REASONABLE
PROFITS,WHICH
INCLUDE INTEREST ON HIS CAPITAL, REMUNERATION OF HIS
SERVICES AND COMPENSATION FOR HIS RISK.
4] THE RESIDUE WILL BE THE LANDLORDS SHARE OF RENT.
NOTE: BEAR IN MIND THAT WHAT IS ASSESSIBLE IS THE
PROPERTY AND NOT THE TRADE.
RESIDUAL METHOD
This method is used to value property with
Development potential.
Development potential is also called Latent
Value.
Increased value of property after carrying out
development will be more than expenditure
incurred.
RESIDUAL METHOD
RESIDUAL METHOD
Cost of each item of infrastructure is estimated and
Allowances made for each relevant factor which
are deducted from sale value of small plots, carved
out from larger plot.
RESIDUAL METHOD
Cost of development will include:1.Building costs
2.Architects fees [% of cost of development]
3.Engineers fees
4.Other professional fees [% of proceeds of sell]
5.Advertising and legal fees