Currently, property valuation methods in the country are as diverse as the property laws in different states  It seems that India has finally woken up and understood the requirement of property valuation. Consider this: In a recent poll conducted by ConstructionBiz360, the e-portal of Times Journal of Construction and Design (TJCD), record 100% voters voiced in favour of bringing in some regulation in the country’s property valuation system. Put simply, real estate or property valuation is the process of knowing the market value of a property. Currently, property valuation methods in the country are as diverse as the property laws in different states.
With the real estate industry growing leaps and bounds in recent times, coupled with the fact that property in India is considered to be a permanent asset, the need for real estate valuation has risen commendably. But alas, there are hardly any prescribed standards, guidelines or reporting formats for property valuation in India, facilitating valuers to manipulate assumptions, calculations and approaches.
Therefore, industry leaders, realty analysts and market regulator SEBI[i] opine that the property sector does need to address the valuation practice seriously to reduce revenue leakage for the government.
When a TJCD correspondent contacted CREDAI[ii] president Santosh Rungta to take his opinion on the same, Mr Rungta said, “Yes, addressing property valuation is very much a need of the hour. But for this, the government should initially sit down and frame a policy by which land can be made available to all strata of society (especially lower and middle-income people) as land valuation make up for 50% of the property cost.”
Govt steps up
Realising the opaqueness in the country’s property valuation system, the Urban Development Ministry, along with the National Housing Bank (NHB), the Indian Bank Association (IBA) and the Corporate Affairs Ministry has outlined a handbook on standards, policies and procedures for property valuation by banks and housing finance institutions (HFIs). Besides, it has also drafted a Valuation Professionals Bill, with a target to create a council of professional valuers.
Welcoming the move, Bhim Yadav, CEO of Falcon Realty Services, a reputed New Delhi-based developer says, “Till now, property valuation methods in India have been wide-ranging and varied for different states, thereby resulting in manipulations and miscalculations. In most cases, real estate valuations were magnified based on assumptions about future property values. With ‘Valuation Professionals Bill’, it is expected that there will be prescribed standards and guidelines for property valuers and instances of unfair practices and frauds will come down.”
According to the new policy, submission of supportive documents becomes critical before the valuation process begins and membership of Royal Institute of Chartered Surveyors (RICS) is also a necessity for registration of valuers. Besides, any kind of unsatisfactory performance (including professional misconduct, use of unfair practices, violation of the code of ethics and others) from a valuer can invite stringent action at the cost of being taken off the panel.
Jeeta Bandopadhyay
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