questions & opinions
KNOWLEDGE BANK FROM B KANAGA SABAPATHY
LET KNOWLEDGE SPREAD
“Questions and Opinions – 09/08/2024”.
Question from a fellow valuer:
One of my clients is owning a shopping complex in a primary location. Now, he is requesting me to issue you a certificate on reasonable rent. Can I adopt a rate of return of 8% or more on total value by land and building method and issue certificate?
Opinion:
You have not mentioned the purpose of valuation.
If the purpose is to issue a certificate for the purpose of fixation of fair rent, then adopt a rate of return as per the Rent Control Act prevailing in the respective State.
If the purpose of valuation is to find the reasonable rent or any other purpose then, consider a suitable rate of return prevailing in the locality as on the date of valuation. It may be 4% or 6% or 8%. As an experienced local valuer you alone can fix an appropriate rate of return. There is no hard and fast rule.
Remember, be prepared to defend your valuation when questioned.
You need not adopt land and building method only to fix the value of the property but you may go for any other suitable method like composite rate method. If you have any other doubt, consult your senior valuer of your place
With best wishes,
B. KANAGA SABAPATHY
bkvaluer@gmail.com
www.bkanagasabapathy.com
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