Land valuation in Kazakhstan stirs controversy14 july 2014, 13:57
Land valuation causes much dissatisfaction among Kazakhstani population. The reason is that the results of assessments made by various valuators on the same land plot often differ.
Citizens are often dissatisfied with the level of compensation they get for seized land property. The question is particularly pressing in Astana where construction continues at a high pace. One of the protests saw two women climb a crane, where they spent four days in a protest against their house being taken for public needs. The compensation offered for the 100 sq. m. house was 4,988 mln Tenge (around $33,000 at the time). Where as the minimum market price of a house of this size in Astana is at around $70,000.
The Center of judicial examination of the Ministry of Justice of Kazakhstan held a roundtable discussion on the topic. Besides the representatives of the center the discussion was attended by the Registration Services Committee and the National Chamber of Appraisers. Deputy Minister of Justice Bahytzhan Abdraim also attended.
Vice-Minister Abdraim said that according to the analysis conducted by the Prosecutor General on the seizure of land for public use in 2012-2013, serious variations arose in the value of similar land plots. The minister suggested that this may be due to the difference in the procedure that appraisers and forensic experts follow.
He explained that evaluators were guided by the law of Kazakhstan “On Appraisal Activities" and the Valuation Standards. However, these standards only outline only the basic rules of calculating and reporting the cost for the main types of property. On the other hand, forensic activity, unlike valuation, is an integral part of law enforcement and judicial activities, and is therefore regulated by the procedural legislation.
The Vice-Minister called to harmonised the real estate and land valuation systems. He suggested a number of measures to efficiency unify the regulatory framework for appraisers and forensic experts.
According to the Judicial Examination Center’s director Isidore Borchashvili, land has become an object of speculation in recent years for dishonest owners and even public officials. Some officials aware of the government's utilities and road construction plans intentionally buy land plots in the places where the state-run construction will take place in future to get a hefty compensation for the land.
As for the difference in valuation, Borchashvili believes that discrepancies in land valuation arise primarily from lack of a uniform system of valuation of movable and immovable property, citing imperfection of the Law "On State Property" as the chief cause of the lack of a uniform approach.
Besides being very general, some of the valuation approaches are clearly obsolete, even those adopted rather recently. For example, Paragraph 2 of Article 67 of the Law "On State Property" adopted in 2011 says that the cost of land for state property is determined according to the price that is specified in the deed on the land. That is, if the cost of land in the last deed made 20 years ago was $20,000, then the current cost of the land remains the same, regardless of the market price or inflation. This provision was adopted after the government was hard hit by the preceding years of the bank-loan-driven construction boom when real estate prices grew tenfold in just one decade making real estate an popular investment tool.
Borchashvili added that lack of a unified and comprehensive methodology for land valuation led to speculation. He believes that there is a need to create a work group from among the experts of the Judicial Examination Center, Registration Services Committee and the Chamber of Appraisers to examine the legal and regulatory framework of land valuation and develop proposals to improve it. It is also important to compile and analyse practical cases that forensic institutions and appraisers deal with before developing the new unified method.
Writing by Dinara Urazova, editing by Tatyana Kuzmina