THIS IS WHY YOU NEED A PROPERTY VALUER
You have probably seen a lot of properties been advertised for sale and wondered who comes up with the selling prices. Right? Here is the thing, you can spend all the money you have and build yourself an amazing home in a leafy suburb in one of the cities but guess what, for official purposes, you will need a registered and practicing valuer to carry out a valuation and attach a value to it according to laid down procedures and standards before you declare its value. There are several reasons why you will need a valuation done for your property so let’s look at them;
Valuation for Sale/Stamp Duty
According to the Stamp Duty Act Cap 480 of the laws of Kenya, any complete transaction for sale of a property attracts stamp duty tax. This tax is calculated at a certain percentage of the property’s market price at the time of sale completion. For a long time valuation for stamp duty purposes was only being carried out by Government Valuers but the mandate has since been extended to Private Practice Valuers.
Valuation for Insurance
All buildings must be insured against any damage that might occur such as fire, burglary, earthquakes etc. To calculate the amount of premium payable to insurance companies and the sum insured, a valuation of the market price of the property is needed. Take note that vacant land is not insurable.
Valuation for Book Keeping
Common to corporate organizations with a large property and asset portfolio, valuation for book keeping purposes is a norm. Such is usually done at intervals, most likely biennial (every two years) to track any changes in the values of company assets and pave way for disposal of some which could be in poor conditions/obsolete. This also tracks changes in the overall position of the organization in terms of assets and improves asset management.
Valuation for Credit Collateral (Mortgage)
For private practice valuers, this type of valuation comprises the bulk of the day to day assignments. Most of these valuations are needed by financial institutions such as banks and saccos to use the property as collateral when issuing loans.
Valuation for Auction
When a lender defaults on loan payments and the lending institution used property as collateral, the property is auctioned to recover the money that has been defaulted. The valuer attaches a reserve value to the property and according to the Land Act No. 6 of 2012 of the laws of Kenya, forced sale value shall not be more than 25% below market value.
In another scenario when a corporate organization decides to dispose some movable assets such furniture, computers, equipment or motor vehicles through a public auction, a valuation is often carried out on the assets and a reserve price is set. This ensures the organization has an agreed minimum value for each item to avoid losses given the procedure for auction itself in financially consuming.
Rental Assesment Valuation
Without forgetting the rental space, a rental assessment is a valuation done to determine the rental rates for residential, commercial, godowns & warehouses, stalls, storage space and parking lots. In a world that property values are dynamic, a rental review is supposed to be done at least yearly for residential units and biennially for commercial spaces to review the rates to market rate. Please note that a review does not automatically mean an increase in chargeable rent. It could remain constant or also shift downwards depending on market dynamics at that particular time.