International Conference Mass registration and valuation December 08 – 09, 2016 Pilot project on real property mass formation and valuation for taxation in Belarus Dmitry Rytvinski Project manager Head of valuation department National Cadastral Agency Minsk, Belarus rytvinsky@nca.by

Belarus on the map of Europe

Key facts about Belarus Capital: the city of Minsk Belarus is situated in the eastern part of Europe Belarus borders with Russia, Ukraine, Poland, Lithuania and Latvia Area: 207,600 km² Population: 9.5 million people (17 of 44 in Europe) Administrative division: 6 regions (Oblast) Official languages: Russian and Belarusian GDP: 40.6 billion USD (81 of 186 in the WORLD per person) Rating of "Doing Business" (World Bank ranking): 2016/2017 : 50/37-th place/ See more interesting key facts on the website http://www.belarus.by and welcome to Belarus.

National Cadastral Agency (NCA) Founded: 1998 Founder: The State Committee on Property of the Republic of Belarus Functions: land and real property administration manage registers registration and formation of real property IT-software mass and individual valuation GIS systems, information from registers

National Cadastral Agency (NCA) Structure: Valuation department – 25 persons Legal department – 8 persons IT-department and software support – 34 persons Formation and registration department – 35 persons Administrative staff – 32 persons State Registers: State Property Register (www.gzk.nca.by) Administrative and territorial units of the Republic of Belarus Register (www.ate.nca.by) Value Register (cadastral value of land plots and taxation base for land plots) (www.vl.nca.by) Price Register (www.pr.nca.by) Address Register (www.addr.nca.by)

Key facts about mass valuation of lands in Belarus NCA carries out the cadastral valuation of urban lands only Experience from 2000 – 16 years! Professional staff, some of them from the early beginning Swedish knowledge and experience support mostly, other mass valuation market oriented international influence

Key facts about mass valuation of lands in Belarus The Types of LANDS Functional Use: single-family houses multi-family houses industrial property commercial property recreation property Types (categories) of Valued Lands: settlement lands (cities, towns) lands in the settlements for summer residence lands for industry, services and trade, located outside the territory of the settlements (Gas Stations, hotels, cafes)

Mass Valuation of Lands in Belarus Today Periodicity of work should be carried out at least 1 every 4 years Responsible contractor: NCA Plan for The Types of LANDS Functional Use : 2015-2016 2016-2017 2017-2018 (it’s not a mistake) multi-family houses single-family houses recreation property commercial property industrial property

Basic principals for the Mass Valuation in Belarus Mass valuation is based on market information (sales transactions, offering for sale and rent, etc.) Statistical methods for modeling + GIS using spatial Data information The value of the plot is an x% in the total value of the real property UNIT Real estate market analysis: market capacity price trends qualitative and quantitative characteristics of properties investment costs during construction coverage of the engineering communications city-forming structure and others

Results of Mass Valuation of Lands use for: Taxation (since 2004) Land rent (right to make rent contract) Mortgage Expropriation Sale transaction to private property Auction etc

Pilot project: new challenge WHAT IS THE WAY TO THE SUCCESS?

GUESS WHAT? CHALLENGE One head is good, two - creative

Pilot project: profile Full name: pilot project on real property mass formation and valuation for taxation in Belarus. Initiator: NCA, State Committee on Property of the Republic of Belarus, Ministry for taxation of the Republic of Belarus Strategic mission: develop an effective mass valuation system of real property for taxation in Belarus Sponsor: the Government Responsible contractor: NCA Time frame: 01/15 – 06/16 Territory: Kobrin district (include Kobrin town) and 1 administrative district in Minsk

Pilot project: objectives DATA mining: «you can gather & store what ever information you want but without BIG DATA analysis it’s just an informational rubbish» Find a cheap technology to get information in one GIS oriented database Identification and collecting of information from papers into database (data about characteristics of all properties on the pilot territories) Make new classification of real property: easy to understand, usable for different real property management purposes

Pilot project: objectives Analyze the result and make offers for organizing new TAX property system based on market value Mass VALUATION of real property objects based on real property market information Analyze the result and make offers for organizing appeals system Make a feasible study for the Government for understanding total cost for the whole country

Pilot project: Key facts about SOVIET District in minsk Population of MINSK: 2 mln Area: 307 km2 (Soviet district – 20,5 km2 ) Numbers of real property objects in Real Property Register (in the beginning of the project): Land Parcels: Minsk - 47 658 4 114 - Soviet district. 10-15% without spatial information. Approximately 85% of all land parcels. Buildings: 43 442 (4 564 Soviet district). Approximately 90% of total amount.

Pilot territories: Key facts about Kobrin district Location: Brest region Population: 89 000 Area: 2 039 km² (6,6% of Brest region, 1% of the country) Numbers of real property objects in Real Property Register: Parcels: 35 830 – approximately 33% of total amount without spatial information. Builds: 28 319 – approximately 75% of total amount.

MASS VALUATION SYSTEM OF REAL PROPERTY BASED ON MARKET INFORMATON? THE MAIN QUESTION WHAT ARE PROS AND CONS FOR THE COUNTRY TO HAVE MASS VALUATION SYSTEM OF REAL PROPERTY BASED ON MARKET INFORMATON?

WE WILL Guide YOU THROUGH 4 main BLOCKS OF THE SYSTEM

DATA NATIONAL CADASTRAL AGENCY Aliaksei Khitro Deputy Head of Valuation Department Elena Dubovik Lead GIS specialist

Who owns the information, he owns the world Nathan Rothschild

Data. Challenge Property register Price register Value register State property register Price register Value register Register of administrative-territorial units Register of characteristics Address register

Data More than 20 datasources NCA registers & data External registers & data New methods of data collection Usage of remote sensing results Usage of objects’ panoramic photos Extended list of characteristics Property declarations New methods of data analysis Data mining Data mapping

Data. Directions DATA COLLECTION MARKET DATA ATTRIBUTE DATA GEODATA Sales data ▪ Price ▪ Date ▪ Description Land data ▪ Size ▪ Use ▪ Owner Property location data ▪ X, Y ▪ Shape Incom&expense data ▪ Rents ▪ Overal rates ▪ Description Building data ▪ Size ▪ Construction ▪ Use ▪ Condition ▪ Age ▪ Other Value factors data ▪ X, Y ▪ Neighborhood ▪ Area Cost data ▪ General ▪ Specific Room data ▪ Size ▪ Construction ▪ Use ▪ Condition ▪ Age ▪ Other Visualization ▪ Map ▪ Interface ▪ Area

GIS. Objectives Location Visualization geoprocessing models geodatabase maps databases

Quality of GIS-information. Houses Before After Map legend Map legend Boundary Boundary Land plots Buildings Land plots

Quality of GIS-information. Garages Before After Map legend Map legend Land plots Garages Land plots

Results of data collecting Soviet district of Minsk Kobryn Kobryn district Property units 92 465 41 181 52 802 unregistered 5% 20% 26% nonresidential property residential property Data quality Before After

Data. Main Principle Land Building Property unit Purpose use Characteristics Location

Data. Collection Utility providers Paper archives Property register Price register Property register manually manually PMF.NCA.BY Value register Local databases manually GIS Register of administrative-territorial units partly manually Other registers Tax register ???? Register of characteristics ??? Address register State property register

Offers Utility providers Population register & rents Local databases Register of legal entities Population register Utility providers Local databases insurance Price register Property register RE.NCA.BY bank Value register police vechicles Register of administrative-territorial units Tax register Register of characteristics Other databases Address register State property register

Data. Problems Data collection & storage Data unification Data analysis Statistical research Business intelligence

Das Magazin: Trump could win thanks to Big Data and new voters method of analysis

Pilot project for me Chance Challenge Experience Memories

MASS VALUATION NATIONAL CADASTRAL AGENCY Aksana Salianka Anton Malchuk Head of individual valuation division Anton Malchuk Head of cadastral valuation division

B. Property attribute data MASS VALUATION A. Market data B. Property attribute data 1. Data collection and maintenance Data quality review Data distributions Market patterns Price trends 2. Data analysis 3.Model development 4.Model application, review, reconciliation & reporting Application Review & reconciliation Final value determination Specification Calibration Quality assurance Reporting & documentation

21 purpose use property groups CLASSIFICATION Purpose use is not defined Purpose use is defined FINISH START Residential property Non residential property 3 groups 18 groups 21 purpose use property groups

Cadastral value is assessed per Unit MAIN PRINCIPLE Cadastral value is assessed per Unit Sale transactions Sale offers Rent ratios Etc. market data Purpose use Characteristics Location 100% Land plot Building + 30% 70% 10% - 80% 20% - 90%

Sales comparison approach VALUATION MODELS Sales comparison approach Cost approach Multi-family houses Model №1 Industry Model № 7 Family houses Model №2 Agriculture (farm) Offices; Finance, banks; Health service; Education Model №3 Public buildings Hotels Retail & pharmacy Food service Service Casino Model №4 Special property Warehouses Industrial Agriculture (farm) Power & engineering support property Model №5 Garages & parking places Model №6

VALUATION VARIABLES Location 7 VALUATION MODELS Age Size Quality Special characteristics Construction characteristics Utilities Interior Etc.

RESULTS. TOTAL VALUE

RESULTS. TOTAL VALUE

Kobrin. Single family houses RESULTS. THE SOCIAL ASPECT Kobrin. Single family houses

QUESTIONS How many variables is optimal for mass valuation models? How many mass valuation models is optimal? Connection between number of variables & appeals Revaluation period

Pilot project for me Challenge Experience Professional development Perfect team

THE PILOT PROJECT’S LEGAL SUPPORT & APPEALS Alesia Khadasevich Senior Legal Adviser, Department of Registration Activities Legal Support

Objectives New relationship legal regulation of Circumstances and conditions Responsible persons and their competence Contents and life cycle Results and their application Appeals

State information resources What should be changed? Valuation State registration State information resources Tax Legislation about

of the Republic of Belarus Tax legislation Tax Code of the Republic of Belarus Property tax Land tax PROPOSITIONS Establishment of a single tax on a built-up land plot (with the exception of one on the leased land plots) The tax regulation adjustment

State registration legislation Lack of data needed for property valuation that only an owner has PROPOSITIONS The transfer act forms based on the types of real estate functional purpose confirmation Including a transfer act as a necessary document to register a deal with real estate

State information resources legislation Necessity to create one unified information resource for the purposes of cadastral valuation PROPOSITION Confirmation of an act about creating Value Register and order of it’s maintenance

Valuation legislation Lack of clear regulations on cadastral valuation PROPOSITION Confirmation of an act about the order of cadastral valuation implementation and appealing against its results

Reaction to innovations Appeals Reaction to innovations

Appeals. When? Mass Valuation Cadastral Value New Tax Size Appeals

Appeals: world practice Body tax authority court special organization valuation (cadastral) organization Terms 3 months 1 month 8 weeks

Do you disagree with property cadastral value? To Appeal or Not Do you disagree with property cadastral value? 1. I feel uneasy not knowing how it works. Pre-Appeal Submit a request for applied valuation methodology explanation 2. Yes. I don’t agree! Make an appeal (6 months from the moment of information addition into the Value Register)

Appeals Appeals procedure Pre-trial order Court order Appeals against property characteristics Appeals against property cadastral value

Appeals against property characteristics Territorial organization of the state registration Application Unregistered property Registered property Technical inventory + state registration Technical characteristics verification New cadastral value

Appeals against property cadastral value Application Commission of National Cadastral Agency Documents Consideration by The Commission Abandonment without consideration

Appeals against property cadastral value Abandonment without consideration by The Commission expired appeal individual valuation held place earlier than 6 months prior to filing an application difference between cadastral value and individual value: less than 15 % - Minsk, regional centers less than 20 % - other settlements

Appeals against property cadastral value Consideration by The Commission Decision New cadastral value Individual valuation results as new cadastral value

Questions Appeals statistic Different appeals procedure for transient period Compensatory mechanism for owner’s expenses on real estate individual valuation Who can make an appeal? On what grounds?

Pilot Project for me

THANK YOU FOR YOUR ATTENTION