DAMAGE LIMITATION – COULD JUDICIAL DECISIONS IN VALUATION METHODOLOGY HAVE A WIDER IMPACT
||DAMAGE LIMITATION – COULD JUDICIAL DECISIONS IN VALUATION METHODOLOGY HAVE A WIDER IMPACT
||Book of Abstracts: 13th Annual European Real Estate Society Conference in Weimar, Germany
||There are occasions where the value of a property is required when the building is not in a state comparable with market expectation. The key indicators that may lead to that value are expected to be selected by a process of comparative analysis of recent transactions in property of a similar size in the same locality. But the influence of condition upon value has received little consideration in valuation theory. The assessment of damages in litigation within the United Kingdom or the resolution of liability for lease end liability in England and Wales seeks to rely upon a valuation of a property in its disrepaired state. There is no accepted methodology for achieving such a valuation. It is rare to have access to sufficient comparable evidence of transactions in property in a comparable condition that is also comparable in all other respects. As a result, and in part due to the poor quality of valuation evidence supplied in litigation to date (Crosby & Murdoch 2002; Hutchison, et.al.1996), the British Courts now lean toward accepting that the costs of the outstanding work (incorporated within a calculation) should be the preferred route of achieving the value in the diminished state. This paper reviews the rejection of valuation evidence as a trend by reference to the treatment of valuation evidence in Court decisions and summarises the acceptance of a cost methodology to calculate loss in decisions over the past five years. The paper questions whether the acceptance of this method of Valuation in the narrow field of litigation may have a wider implication upon for the valuation profession.
||valuation methodology; cost of works; diminution; loss
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