Land valuation in Kenya. Fees, process, assessors

The appraisal makes it possible to determine the market value of a piece of land. PHOTO | TO FILE

Real estate appraisal is the process of analyzing a property to determine its market value for tax purposes or to allow the rental, sale or acquisition of a property.

Who does the real estate appraisal?

Until January 2021, the valuation of land in Kenya for stamp duty, land rent and rates was the prerogative of appraisers in the appraisal department of the Ministry of Land Use Planning.

Officials assess land to ensure that revenue owed to the state is collected and that public property is sold or acquired in a way that protects the fiscal interests of the government.

Being the “owner” of all leasehold properties, the state charges rent for the rental of its property. Land rent depends on the approved user and the location of a property. Plots in the CBD, for example, report higher rents than residential properties in the cities.

In response to the demand for land valuation in Kenya, the government amended Section 10A of the Stamp Duty Act, Cap 480 to allow private assessors to undertake an appraisal for stamp duties.

READ: Title deeds must be reissued. What does that mean

A list of accredited assessors to undertake Property Assessment for Stamp Duty is posted on the Department of Lands website for public use.

“This reform was necessitated by the need to improve efficiency and generally reduce the time taken to return valuation figures,” Lands CS Farida Karoney said in February.

Editor’s Note: The government does not charge any appraisal fees for stamp duty, but those who elect private appraisers incur appraisal fees under the Appraisers Act.

Land assessment process

Appraisers are often hired when buying or selling a property.

They are also useful when lenders advance loans against title deeds, payment in litigation, for legal guarantees, book value and when determining property rates.

Some banks employ in-house appraisers or use a property value calculator. However, in most cases the appraisal is outsourced to independent experts who are recognized in the lender’s panel.

Real estate appraisal is also done before the state purchases private property through expropriation.

Appraisal reports help protect the monetary interests of owners whose property has been acquired by the state for the construction of roads, dams or other public infrastructure.

How is the property valuation done?

A direct comparison with recent comparable sales is the basis of most property assessments. However, the evaluators also take into account characteristics such as size; topography and layout of the block; ease of access to the land; planning restrictions; and the location of the property.

Appraisers use some of the recent comparable sales to get a rough figure for the land in question, then make adjustments based on any significant differences between properties.

Kenya Property Assessment Fees

The cost of land valuation in Kenya is provided for in the schedule of fees, Valuers Act Cap. 532 of the laws of Kenya. The 2011 Evaluator Rules (Forms and Fees) (Amendment) state: –

1.) Urban assessment, scoring and agricultural

First Ksh. 2,000,000 at 1.0 percent

0.25 percent residue

2.) Mandatory acquisition valuation

First Ksh. 2,000,000 at 2.0 percent

Residues at 0.5 percent

3.) Rental evaluation

First Ksh. 400,000 per year at 10 percent

Residues at 5 percent.

4.) Minimum evaluation fee

Kshs.15,000 for any valuation.

7.) Advice

A minimum of Ksh. 5,000 per hour when such a consultation does not involve the completion of an appraisal and the compilation of an appraisal report and advice on the value of the property.

8.Travel expenses and disbursements:

These are based on the costs incurred to undertake the assessment.

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