Determining the value of unregistered land: Examples from around the world
There is a widely-discussed notion that title registration and formalisation are essential prerequisites for valuing unregistered land.
8 MAY 2018
This report investigates the widely-discussed claim that title registration is prerequisite for valuing unregistered land. This is the first time that informal land markets in Indonesia, Ghana and Peru have been studied in this way and this research and its findings should help provide a wealth of background information to anyone working or who has an interest in this sector.
The study is particularly important because governments, the valuation industry and professional bodies need to ensure they are informed about, and equipped to respond to, future scenarios for the expansion of these informal land markets.
The research both builds on previous work in this important sector (RICS Research 2011 – Valuation of unregistered land – Kenya, RICS Research 2016 – An evaluation of valuation practice in sub Saharan Africa – case study Ghana) and helps provide an evidence base for current initiatives such as the International Land Measurement Standard (ILMS), UN Habitat GLTN ‘Valuation of unregistered land guide’, UN FAO ‘Valuing land tenure rights’ and for future initiatives such as the development of ‘environmental/ecosystem valuation’ standards and International Valuation Standards (IVS).
In addressing the research problem, empirical research was carried out in Ghana, Indonesia, and Peru – all countries where the issue of unregistered land is recurrently debated. Registered valuers, officers of the land sector agencies responsible for registration and valuation, and academics who specialise in valuation were interviewed alongside architects, anthropologists and urban planners who work with occupants of unregistered land. The research focused on:
Valuing unregistered land highlights important strengths but also challenges to valuation practice. The study finds that valuers have shown industry and innovation in adapting valuation methods and in this sense, local valuation practices have been quite resilient. However, there are also challenges specific to the valuation of unregistered land. Undervaluation is a major challenge, as is overvaluation in some instances. Overall, most of the conflicts associated with compensation for the exprorpriation of unregistered lands arise from the top-down nature of the valuation process, a narrow view of ‘value’ as limited to only legally created structures, and an overly strong reliance on asocial valuation techniques for establishing value.
The study concludes that challenges to valuation could be better addressed by determining the highest and best current use of the property or the opportunity cost of current use in a process that entails systematic investigation, including interviewing a range of willing and able market participants and other stakeholders to arrive at values that are more reasonable to stakeholders and the courts. Valuation – whether for registered or unregistered land – can be more useful as a social practice.
This research was funded by the RICS Research Trust. The Trust supports and promotes high-quality independent contributions to knowledge in the disciplines of land, real estate and construction.
The Trust is ready to consider applications from professionals and full-time researchers located anywhere in the world.
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