FIG Commission 9 - Valuation and the Management of Real Estate

Working Group 9.1
Manual and due diligence protocol for the ‘Valuation of Unregistered Lands and informal property’

Introduction

Following UN-Habitat/GLTN’s guide no. 1/2018,  which explains why valuations of unregistered land and informal property are needed, and RICS Research (valuation of unregistered land), UN-Habitat/GLTN is developing a robust, due diligence protocol and manual (including basic checklists and sample formats) on the registration of unregistered lands.

Value, and its attribution to unregistered and/or informal land & property, is a key component to sustainable land administration systems and is a critical component of effective land acquisition, taxation and transfer processes. Indeed, it can be argued that ‘value’, whether defined in purely economic terms or in a wider context of social, environmental and cultural value, is the key to establishing tenure security and identification of legitimate ownership. ‘Value’ is directly linked to local and regional revenue generation, functioning formalized land & property markets and is a central enabling factor within land-based financing (as underlined within the New Urban Agenda). However, this is a difficult area, with limited professional capacity and knowledge, and a chronic lack of data and in many cases cultural/social understanding. Several organisations, agencies and NGOs (GLTN, RICS, FIG, UNFAO, Namati) have attempted to better understand unregistered land valuation and informal markets through extensive research, policy guides, international guidelines (VGGT) and due diligence standards (ILMS & UNFAO – lawyers advising on land acquisition). This has resulted in strong empirical evidence and potential governance but not in a practical, field-based due diligence protocol for how to arrive at appropriate and reasonable market[1] ‘value’. This manual has a great opportunity to synthesize previous outputs, bring closer collaboration between interested parties through the formation of a working group, and help ‘value’ become more effective and appropriate during the land formalization, acquisition, transfer and taxation process. 

Policy Issues

The potential output has enormous ramifications for practice and could be extremely influential. It is important to maintain the collaborative nature of the initiative and to include other significant organisations such as the International Financial Corporation (IFC), ILMS coalition and International Valuation Standards Council (IVSC).

It is also important that this output is directly connected to:

FIG Publication 67 - Property Taxation for Developing Economies

FIG Publication 54 - Compulsory Purchase and Compensation

FAO Publication - Valuation of land rights – VGGT technical guide

Chair

 James Kavanagh, United Kingdom

What we are working on - Valuation and the Management of Real Estate. Working paper Valuation and the Management of Real Estate.

What's New

Progress:

A masterclass was planned to take place at the World Bank meeting in March 2020 which was cancelled due to COVID-19. Instead an online meeting was held, and all experts involved in this activity were looking forward to having another consultation face-to-face in Amsterdam during FIG Working Week. The FIG Working Week was cancelled as well. The planned session was meant as an interactive consultation, bringing together expert views on a new unregistered land valuation manual that will cover about 70 percent of the land surface of the world. This consultation will now also be changed to an online version. The intention was to discuss the preliminary work of the authors, initial concepts that need to be recognised and included and also act as an opportunity to engage the global FIG family of land professionals.

Authors of the manual are Dr. Mike McDermott and Dr. Peter Wyatt, who had looked forward to an open discussion on the format of the GLTN manual and a debate on the changing nature of valuation and its critical interaction with developing world land security, informality and differing forms of tenure.

Purpose of CFP:

 The aim of this project is to develop a due diligence protocol/standard and field manual specifying the procedures required from land professionals, surveyors and valuers to implement the GLTN ‘valuation of unregistered land’ policy guide principles and conclusions.

Brief Background of the Project

The Global Land Tool Network, as facilitated by UN-Habitat, is an alliance of international, regional and national partners working together to “securing land and property rights for all” through the development of pro-poor and gender responsive land tools and approaches within the continuum of land rights framework. It supports the implementation of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Forests and Fisheries (VGGTs), the Framework and Guidelines for Land Policy in Africa, Sustainable Development Goals (SDGs) and the New Urban Agenda.

Value, and its attribution to unregistered and/or informal land & property, is a key component to sustainable land administration systems and is a critical component of effective land acquisition, taxation and transfer processes. Indeed, it can be argued that ‘value’, whether defined in purely economic terms or in a wider context of social, environmental and cultural value, is the key to establishing tenure security and identification of legitimate ownership. ‘Value’ is directly linked to local and regional revenue generation, functioning formalized land & property markets and is a central enabling factor within land-based financing (as underlined within the New Urban Agenda). However, this is a difficult area, with limited professional capacity and knowledge, and a chronic lack of data and in many cases cultural/social understanding. Several organisations, agencies and NGOs (GLTN, RICS, FIG, UNFAO, Namati) have attempted to better understand unregistered land valuation and informal markets through extensive research, policy guides, international guidelines (VGGT) and due diligence standards (ILMS & UNFAO – lawyers advising on land acquisition). This has resulted in strong empirical evidence and potential governance but not in a practical, fieldbased due diligence protocol for how to arrive at appropriate and reasonable market ‘value’. This manual has a great opportunity to synthesize previous outputs, bring closer collaboration between interested parties through the formation of a working group, and help ‘value’ become more effective and appropriate during the land formalization, acquisition, transfer and taxation process. Main Outputs and Activities.

In close collaboration with UN-Habitat (regional and country offices), Land and Global Land Tool Network Unit, government and provincial authorities, and other land stakeholders, the Professional Cluster will be undertaking the following key interventions and activities as follows: On Consolidation of Processes, Experiences and Strategies:

• To support the consolidation of existing processes, experiences, lessons learned and strategies regarding the valuation of unregistered land
• To develop connectivity between high level guidelines (VGGT), existing standards (RICS, IVSC), education (GLTN land professional curriculum) and field based protocols/manual
• To evolve professional debate and agreement on a more appropriate form of ‘market value’ incorporating social, cultural and environmental elements
• To produce a robust, due diligence protocol and manual (including basic checklists and sample format ) for use by land professionals, surveyors and valuers
• To encourage/enable the adoption of this protocol/manual by partners, and by extension financial institutions, acquiring authorities, land administration/valuation/rating/taxation departments
• To develop collaboration with existing land data standards and processes
• To propose ‘open valuation data’ and data accessibility recommendations
• To mobilize international, national and local experts and partners to enable consolidation and integration of strategies and inform land policy and land administration reform processes Main Expected

Result: The production of a ‘due diligence protocol/standard’ and field manual specifying the procedures required from land professionals, surveyors and valuers to implement the GLTN ‘valuation of unregistered land’ policy guide principles and conclusions.