Hans Söderblom Real Estate Economist Division of Real Estate Economics International Seminar 8-9 December 2016 Minsk Belarus Valuation session Hans Söderblom Real Estate Economist Division of Real Estate Economics Lantmäteriet The Swedish Mapping, Cadastral and Land Registration Authority

Mass Valuation is an e-nd User of a Land Administration and Land Management System

Example from the Swedish Mass Valuation system (GIS-CAMA) Private actors Register from authorities (property register, sales price register, property tax register) Register from authorities and municipalities (property register, cadastral index map, buildings, planning, geographical information etc. )

Data capture is a critical input for a mass valuation process Sales Price Register Important aspects; Secure the process of collecting data regarding transactions continously Secure the process of verification of quality of data connected to transactions (Price!) Secure the process to make information about transactions transparent for real estate market - Secure the process of quality of data connected to the property - Secure the process of quality of data if property is changing Combine data from different unique databases. Avoid to store similar data in different databases Stock of Property Talmanus:

Data capture is a critical input for a mass valuation process Valuation model Value A = Value level x Area Sales Price Register Refined sales regarding representativity Yes/No Assessed value for all properties Verification of representativity Analysis for deter-mination of valuation models Data capture and quality assurance of the value factors for the properties for appraisal Valuation model Value B = {[RN + M x (AV - AN)] x B + V x (KN - KV)} x F

Transparency Mass Valuation

Transparency in Sweden Website of Swedish Tax Agency General Assessment of Single-family houses 2015 Value Zone with Transactions 1) Date of transaction 2) Price for transaction 3) Quota; Assessed value/price for transaction 4) Code for Non-representative transaction 1) 2) 3) 4) Representative transaction Non-Representative transaction

Appraised value, classification and associated property information Important areas for using the information from the output from a mass valuation process Important areas of use for appraised value, classification and associated property information Physical planning Real Property Valuation Pre-emption cases Capital gains tax Property Price Statistics Insurance process Granting of credit/mortgaging Real property tax Appraised value, classification and associated property information Taxation Credit rating Stamp duty Accounting Talmanus: Acqusition evaluation Credit information Basis for site leasehold rent Basis for marketing Real property charge Basis for purchase of sites for leasehold land Basis for enchrouchment money

Mass Valuation as a base for taxation Important areas for using the information from the output from a mass valuation process Mass Valuation as a base for taxation

Responsibilities Authorities responsible for different parts in a mass valuation system; Main actors: Ministry of Finance/Taxation Authority (Swedish Tax Agency) Cadaster organisation (Sweden - Lantmäteriet) (In Sweden independent valuers are hired by tender for securing knowledge from the local property market) The responsibilities between these actors must be clarified. Cooperation is needed. Other actors and authorites could/should be contributing, municipalities, planning authorities, Ministry of Forestry etc.

Some experiences from Sweden Public awarness increasing Political decisions about changes in taxation of housing property Decreasing of transactions for commercial property and multifamily dwellings Digital information– basis for a sufficient e-mass-valuation-system

Experiences - Improvements Public awarness increasing - Public information on Swedish Tax Agencys website makes people more interested in the methods and processes of mass valuation and assessment

Experiences - Improvements Public awarness increasing - Improvements has been done in the preparatory work before a General/Simplified assessment - It leads to increasing demands on the documentation from the mass valuation process at local and regional level Documentation connected to the chosen base values decided for value zones Documentation has become a bigger part of the total work made in the process of mass valuation

Experiences - Improvements Public awarness increasing - Increasing reliability on transactions and the value factors of the transactions, are they representative or not? - The decisions made for base values if transactions is not existing and ”evidences” of why exactly these base values has been determined (here it makes new demands on the staff at Swedish Tax Agency that they must raise their competence of understanding on valuation)

Experiences - Improvements Public awarness increasing The IT/GIS system for mass valuation purposes are developed to serve the user (valuer) with more tools for analysis and guidance in how to analyze and use the tools - More focus on increasing/decreasing of assessed values compared to previous assessment but interaction must still be made to correspond to market value the actual value year

Experiences - Improvements Public awarness increasing The IT/GIS-system has been developed and implemented with more support for quality control and quality checking of the calibration of the value level for the value zones - Motivation from the user (valuer) must be done if calibration is decided anyway on the contrary to the ”quality alert signal”

Calibration of Value zones – Quality control – Alert! Warning!

Experiences - Improvements 2. Political decisions about changes in taxation of housing properties A political decision resulted in that a special governmental committé examined the present system for assessment and proposed changes, either more simplifying process or redevelopment of the assessment system in total Limitation in taxes for residential properties (family houses and multi-family dwellings) /Notice; Credit market actors and other real estate actors has done ”Thumb down” for a redevelopment of the assessment system in total./

Experiences - Improvements 3. Decreasing of transactions for commercial property and multifamily dwellings The process of selling commercial property and multifamily-dwellings property has become more different compared to previous assessments. The properties are instead packaged in a company. The shares in the company are sold instead of the properties because of tax reasons (stamp duty). In that way the properties are transferred to a new jurisdictional owner. - This means that improvements of the market simulation models used in the mass valuation process is needed for these property categories

Experiences - Improvements 4. Digital information– basis for a sufficient e-mass-valuation-system Swedish Tax Agency has the policy to avoid, as much as possible, to disturb the public in their way when handle taxation for citizens income or capital, companies business processes, VAT etc. Instead they try to handle this in a more efficient e-way. This policy has also affected the taxation of properties. It means that all future processes that will be developed and connected to mass valuation or assessment process is from the business perspective that digital information should be used instead of analog capturing of data. This means that data and information of properties and related property market information should always to be considered to be transfered to digital form during future development.

Спасибо за прослушивание прямо сейчас! Then Mass Valuation will be an e-nd User of a Land Administration and Land Management System Спасибо за прослушивание прямо сейчас!

Mass Valuation Property Valuation Sales Price Register Stepwise process before a mass valuation and assessment process is fully realized Belarus – Where are you? Taxation/ Assessment Mass Valuation Legislation Appraised value Legislation Property Valuation Valuation Models Knowledge of Real Estate Market Training Competence Political process Sales Price Register Market Data Information Legislation IT-environment Land information system Land Book Cadaster