Value Based Land Partition Model: A case study in Homagama Pradeshiya
Sabha Area
Prathapasinghe D.(FRICS)
Managing Director, Prathap Chartered Valuations and Consultancy (Pvt.) Ltd, Sri Lanka
[email protected]
Wickramanayake W. S.
Director, Prathap Chartered Valuations and Consultancy (Pvt.) Ltd, Sri Lanka
[email protected]
Wickremasinghe H. T.
Asst. Lecturer, University of Sri Jayewardenepura, Sri Lanka
[email protected]
Abstract
This study focus on partition of undivided land among co-owners.Traditionalland partition among coowners often focuses on dividing the entire land into plots with equal extents. That leads to land plots with equal extents but dissimilar market values where some parties gain higher valued land plots with more benefits whereas others get less-valued ones consequently each parties may not be equally treated based on the value of the lots allocated to them. Simply the traditional practice focuses partition of land with equal extent not on the equal values. By this study, a model is being introduced to address this issue of traditional land partition ensuring the co-owners involved are given land plots with equal values as against the value of the entirety and also ensure sustainabilityof values. A case study in Homagama Pradeshiya Sabha area was used for the development of the model where four co-owners were involved. The subject land was previously subdivided into four lots with similar extents. However, some of the owners were not satisfied the way it has been subdivided claiming the subdivision was not reasonable. Hence, it was needed to subdivide the land with equal and sustainable market values. The methodology used in this study has several stages that flow from collection of land related data to development of the model. Notional subdivision was done in order to find the total Market Value of the land using recent market evidences collected by a comprehensive market survey. Then the land was subdivided among four co-owners adapting per square foot rate and considering the cost of development, developers profit and time value of money. MS Excel and AutoCAD softwares were used for analysing data and developing the model. Accordingly, this already tested model suggest to get a valuer involved in land partition among co-ownersto ensure the divided plots though at dissimilar extents are having equal values on equitable basis.
Keywords
Land partition, market value, notional sub-division, equal values
INTRODUCTION
This study contributes to the fact that the valuer’s involvement is needed for a partition of a land in order to ensure that the owners are treated equitably with equal and sustainable values. A case study in Homagama Pradeshiya Sabha areais used to develop the model of value-based partition which has been already tested and supported by professional real estate and property valuation proficiencies, expertise and knowledge.
In a traditional land subdivision, a large land area is subdivided into smaller land parcels with the purpose ofeasy development andindependent development of one another to increase growth and maximize the use of space. This technique also stimulates the zoning process and selling off of the land.The Standard City Planning Enabling Act (SCPEA, 1928) included the following definition:“Subdivision” means the division of a lot, tract, or parcel of land into two or more lots, plats, sites, or other divisions of land for the purpose, whether immediate or future, of sale or of building development. It includes re-subdivision and, when appropriate to the context, relates to the process of subdividing or to the land or territory subdivided.
When it comes to land partition, according to Keenan (2012), only scenario and procedure are different from traditional land subdivision. Partition of land is applied when there is coproprietorship to the land. Consent from all owners in order to partition of the land out from the original land title is needed.
However, as discussed by Kaddik& Rydberg(2013) and Cassady (2001), many limitations can be seen in traditional method of land subdivision. Moreover, it is frequently found that the extent is focused rather than the monetary value of the land when proposing traditional subdivisions and partitions where the involved parties are not equally and equitably treated in a satisfied manner in terms of market value.
The project which this study was based on was revolved around a partition of a land in which four parties were involved. Previously a traditional land partition was done to divide the land among the four owners. However, when considering the traditional way partition, it can be said that the values of the lots are different where some parties were given higher valued lands with more benefits. Hence, the parties were not contented with the previous partition andwere convinced to get the landpartition into four plots with equal market values. The objective of this study is to introduce a model as a method for land partition ensuring the parties involved are given land plots with equal and sustainable values.
METHODOLOGY
In order to develop the model, the required data were extracted through Survey plan, land value schedules which was constructed using the market evidences found through a market survey in the area. Moreover, when the notional subdivision was done, the planning regulations of the Urban Development Authority (UDA) were considered. In order to analyse the data MS Excel was used and for the development of the notional and final sub-division model, AutoCAD software was used.
CASE OVERVIEW
The studied case has 10A 03R 21.83? as per the given survey planand is located within the Homagama Pradcshiya Sabha about 25km away from Colombo fronting Homagama – Diyagama Road. It is a co-owned land with four owners. Two residences with ancillary buildings were standing on the property however disregarded for the notional subdivision of the land in arriving at market value of the entire property based on Residual Method of partition Valuation.
Through the development of the value-based subdivision model, the entire land was divided into four sections with equal values of each. It ensures the equality and sustainability of the values of land tracts given for each party.
PHASES OF THE MODELBUILDING
The model development procedure includes eight steps. It flows from Collection of land-related data to development of the model.
Collection of Land-Related Data
The data were extracted through survey plan and the surveyor’s AutoCAD drawing of the land and the other documents.
Collection of Market Evidences
A comprehensive market survey was done to identify the market values ranging in the area. Accordingly, zoning of the land was done adapting per perch rates varying from Rs. 700,000/- to Rs. 400,000/-
Zoning Using the Per Perch Value
As per the Royal Institute of Chartered Surveyors (RICS), zoning is a standard method of measuring retail premises to calculate and compare their value. It is used by both public and private sector surveyors. There are different methods to do the subdivision. Shop or retail premises are divided into a number of zones each of a depth of 6.1 metres – or 20 feet. Accordingly, in this study when zoning is done, through the professional experience and knowledge, the land was divided into five zones where the lands fronting the main road claim higher values and lesser values per perch for the rear plots.
Developing a Notional Sub-Division
In order to subdivide the land into tracts with equal values, it is needed to estimate the total Market Value of the land. According to Leelananda (2012), notional subdivision plan was developed by considering all the planning and development regulations imposed by the UDA. Open space, road lengths & widths, tuning circles, no of plots were done accordingly. Further, the entire land was subdivided into 113 plots with extents ranging from 8P to 15P.
Determining the Market Value of the Land
Adopting per perch value in each zone, the Total Market Value of the land was estimated as Rs. 733.3 million. Moreover, share value per party was calculated as follows,
Adapting a per Sqft Rate
With the intention of calculating the amount of share in each zone for each party, per sqft rate was adapted. This was calculated by dividing total zone value by the extent of the zone.
The Preliminary Option of Subdivision
This has been basically determined by considering the concerns of the parties involved in this case and GDV of lots to allocate the spatial arrangement and to determine the cost of development.
Calculation of Share Value of Each Party
The cost of development has been estimated based on the shape, topography, location of the land and degree of improvement required for residential use.
Allocation of Land Value out of Each Zone to each Party
The following model has been used for the calculation of allocated share value per party.
The method of calculating the share amount Party 01 is mentioned below. Similarly, the other party share values were calculated using the per sqft rate as per the above model.
FINDINGS AND FINAL OUTCOME
With reference to the above table, total value of the land was subdivided among the co-owners with dissimilar extents and the final subdivision model is as follows.
CONCLUSION AND RECOMMENDATION
It can be concluded that the partition of undivided land among co-owners must ensure that each party must be received plot with equal value as against the entirety therefore it must be focused on value based partition rather than the extent based. To get value based partition, a professional valuer involvement is a must in the process of land partition. Therefore it is recommended to get involved a professional valuer in the process of land partition to overcome disadvantages of traditional land subdivision and partition methods while certifying complete contentment of the co-owners involved.
LIMITATIONS
When deciding the location of each section, the preferences of the co-owners had to be considered as there were some existing improvements on the land which were occupied by the co-owners. Hence, the sub-division process was confined as per their requirements. Otherwise, the arrangement of the sections could be different and more effective.
REFERENCES
Cassady, R. C., 2001.“Subdivision Problems”,Henry B. Steeg& Associates, Inc., Consulting Engineers, Indianapolis, India.
Kaddik, L. J. & Rydberg, J., 2013.“the subdivision and amalgamation procedure in Sri Lanka”, pp. 59-63.
Keenan, L., 2012. “Family Subdivision Ordinance”,BKK Construction & Land Use Newsletter.
LeelanandaH. H., 2012.“Planning Regulations – Urban Development Authority”. Standard City Planning Enabling Act (SCPEA), 1928.Land Subdivision.
Kaddik, L. J. & Rydberg, J., 2013 Cassady, R. C., 2001