Professional rules and regulations - National issues in an ...€¦ · Other: Rented dwellings and...

Professional rules and regulations -

National issues in an international context

Real Estate Valuation and Cadastre in Land Management, May 2012, Ankara Organized by The General Directorate of Land Registry and Cadastre and

The Chamber of Survey and Cadastre Engineers

Professor emeritus, Dr. Erik Stubkjær Section Land Management

Department of PlanningAalborg University, Denmark

Stubkjær: Professional regulations

Overview

Property valuation in Denmark: For individual sales, for taxation, ..1.Characteristics of Chartered Estate Agents (valuers)

Mass appraisal in Denmark, some key issues:2.Cooperation with municipalities; Sales statistics; and Property data infrastructure, incl. buildings

Research on the role of professionals and their associations3.Wilensky's phases of growing recognition of profession by society

Recent further arrangements: Tribunals + publication of its rulings

An international outlook: Different conceptions of society

Discussion: Potential role of survey and cadastre engineers in development4.Promote co-operation among units of government + Statistics on sales price of real property

Work for documented integrity of the profession + International outlook

Conclusion5.


1. Property valuation in Denmark

Individual sales: Advised by Chartered Estate Agents (valuers), not compulsory

Valuation for taxation: Economists + .. ; before 2003 craftsmen + civil servants

Valuation for assessing mortgage credit loan: Basically Mortgage Credit Institute staff + valuers, adopting MCI norms

Other (court cases, expropriation, ..):

Valuer (expert's report)

Lawyer (head of expropriation committees, since ~1845)

Surveyor (at expropriation formally informs on lots, areas, boundaries,..)


Chartered Estate Agents in Denmark

Title 'Chartered Estate Agents' restricted by act from 1993, motivated byconsumer protection. Registration demands education, etc.

Education: 3 years of part time studies at business academies, and practise.Several variations.

Association: Formed 1912. Presently ~94% are members of the association.

Arranges for professional liability insurance ~325,000 $ - as indemnitytowards consumers)

Established code of business ethics. Carries costs of public ComplaintBoard (~300 cases / year)

International affiliations with FIABCI, TEGoVA, CEPI, ..FIABCI - Fédération internationale des Professions immobilièresTEGoVA - The European Group of Valuers' AssociationsCEPI - European Council of Real Estate Professions


2. Valuation for taxation - The stock and the information systems

All assessed property units in Denmark 2.119.000

Family houses, summer cottages 1.423.000

Freehold flats/ Condominiums 168.000

Other: Rented dwellings and offices, factories, farms, state and municipal properties, ...

Ongoing computerization and development:

Property tax collection system, state governed, yet municipality managed,and used for municipal utility fees as well (1960..72)

Sales reports (Deed abstract with agreed price and its components) (1967)

Building and Dwelling Register, again state governed, yet municipalitymanaged, with owner-supplied data on buildings, etc (1974 - 1976 - 1981)

District plans (Municipal land use restrictions) 1990


Property valuation - More on the information systems applied

Land Value System:

Tiles the country (DK: 44.000 km2) into 60.000 valuation districts

Four valuation models: Garden homes, blocks, industry, and agriculture.

Property Value System:

Regression analysis, drawing i.a. on ~40 categories of property units

For one-, two- and three family homes, and summer cottages: Property value = Land value + Value of building

Construction data from national/ municipal Building and Dwelling Register(BBR). Building value determined through ~25 variables

Condominiums /freehold flats: Property value determined by ~12 variables

Else: Rent per square meter; Capitalization factor; ...


Property valuation - Foreign expert compares Danish approach

Valuation models to the individual properties are developed centrally, butapplied by the municipalities (like in Spain)

Properties are assessed mainly through use of sales data, but combined with theincome approach for property types being rented with infrequent sales, and thecost approach is used for the remaining types of properties (like in Sweden)

Reassessment is performed every second year for half the property stock. Inbetween: indexation based on sales data monitoring, and ongoing maintenanceof the database of property attributes (like Sweden)

Skills: Economists for model building/ calibration. On-site evaluation seldom.

Advanced computer-assisted mass appraisal (CAMA) and tax administrationsystems, linked with computerized cadastral system, and Building and Dwellingsystem (BBR), used for identification of comparable sales. (Sweden andNetherlands have advanced systems as well).


Property valuation - Critical issues, according to same expert

"Ensuring that the law mandates sales disclosure for all properties, and thatthose sales are effectively registered at their real value in the property registry"

" ..ongoing maintenance of the[?] database of property attributes"

"Within the field of valuation there is a growing recognition that thequalifications needed for mass appraisal are different from traditional forms ofsingle property appraisal, and need more statistical analysis skills."

Lafuente, M. 2009. Public Management Reforms and Property Tax Revenue Improvements: Lessons from Buenos Aires.Public Sector Management Series, Working paper 0209

Disciplines of the ~25 academics engaged with valuation by Ministry of Taxation (estimates):

15 lawyers

3 cand. econ.2 pol. science (cand. pol.)1 public administration (cand. scient. pol.)

2 agronomists 1 forester 1 geographer


Critical issues in Danish SDI development - Own experiences

DatabaseS of property attributes must be linked: Joint committee needed

Cadastre, Land registry, Post address, Construction approval, ..

Government (joint committee) and municipalities MUST co-operate:

Municipalities enjoy tax proceeds and collect utility fees anyway

Municipalities UPDATE information: Roads news; Construction news

Is co-operation among units within local government feasible?

Tax/property dept. vs. Construction/planning dept? - Metropolitan vs. rural

Utility companies support Spatial Data Infrastructure (SDI) development


3. Research on the role of professionals and their associations

A professional association is a social actor (Schneider, 1988), operating amongunits of government, other professions, NGOs, and university depts.

The skills and integrity of a profession mandates a specific role, but also newinitiatives for the benefit of society

A Danish example of social actor initiative:

1966, political majority decision to enable the recording of condominiums.

National Cadastre not prepared. Representatives of Danish Association ofChartered Surveyors convinced parliamentary committee of their ability toperform the needed case work, including surveying and mapping.

Recording in Land registry. Min. of Housing rules. Cadastre not involved.

Integrity: acting according to the values, beliefs and principles one claims to hold.


Professionals as a social actor

A professional association is a social actor, operating among other actors: Units of government, other professions, NGOs, and university departments

National configuration of actors may be challenged by external influences

National configuration may change due to political direction and/orcompetition among professional associations

Professions provide services to society.

Fair to compete by providing better and more adequate services.

Sustain position of profession through documented integrity: Acknowledge slips and errors, and learn from them


3.a Phases of 'professionalization'

Phases of growing constitution and recognition of a profession were identified byWilensky (1964). Applied here to the Danish Association of Chartered Surveyors(Hvolby & Christensen, 1980)

Full time occupation: 1769, installed by monarch (New cadastre 1802-1844)1.

Training school, university degree: Examination 1782, 1816; Uni. degree 18562.

Professional association established: 18753.1880 Collection of ordinances, etc.; 1890 Professional journal; 1925 Nordic and international (FIG) affiliations

1918, 1937 Municipal cadastral surveying avoided; 1926 Surveyors assist Land registrar with locating easements

State license law: (1769), 1919, 19634.

Formal code of ethics: 1974, including code of practise5.1923 Tribunal proposed; 1930 Professional liability insurance established; 1937 Employer - employee codes


3.b Wilensky's five phases have been extended in Denmark:

Denmark Lawyers Surveyors Valuers

Tribunal /Disciplinaryboard

Advokatnævnet LandinspektørnævnetKlagenævnet forEjendomsformidling

Publicationof rulings

Advokatnævnetsafgørelser

Landinspektørnævnetsafgørelser

Klagenævnetskendelser

Professionalliabilityinsurance

Code of conduct§ 61 and § 62requestinsurance

LandinspektørernesgensidigeErhvervsansvarsforsikring(Surveyors' Mutual LiabilityInsurance) LgE

The associationprovides forliability insurance(Source)

Own experience: The rulings provide excellent basis for teaching


An international outlook: Different conceptions of society

The history of Danish surveyors' association tells that Europe has a differentconception of society than the prevailing Anglo-American conception (market +democracy)

The notion of Chambers, e.g. of Survey and Cadastre Engineers, also fits with afunctional conception of society (H. Spencer, Émile Durkheim, Talcott Parsons, ..)

Just as the structural parts of the human body - the skeleton, muscles, and various internalorgans - function independently to help the entire organism survive, social structures worktogether to preserve society.[17]

The 'Society as a body' metaphor criticized after the 1960s, because of claim ofrepresenting a static, hierarchic (the head), and conflict free conception of society.

Think, it is still interesting, because the professions each have a social power, whichgenerally is not controlled through general elections. The 'democracy' model is toosimplistic.


4. Potential role of survey and cadastre engineers in development

Promote co-operation among government units1.

Statistics on sales price of real property2.

Work for documented integrity of the profession3.


4. Potential role .. 1. co-operation among government units

Promote co-operation through network building (e.g. Special Interest Groups). Theneed is manifest:

'But still there is a great lack of an umbrella institution that can be responsible to coordinate thenational spatial data infrastructure procedures'

Yomralıoğlu & Aydınoğlu, ITU, 2010, FIG Congress

Shape SIGs, which appeal to s&c engineers, also from municipalities and fromutility companies.

For development of property data infrastructure for valuation, develop skills inSpatial Data Infrastructures (note: www.joinup.eu), but also in publicadministration (e.g. via EIPA.eu)

The Spatial Address Registration System (http://maks.nvi.gov.tr/) looks veryneeded, and thus promising from a Danish point of view


4 Potential role .. 2. Statistics on sales price of real property

"Ensuring that the law mandates sales disclosure for all properties, and that those sales areeffectively registered at their real value in the property registry" (Lafuente, 2009)

A Danish suggestion: Institute a mortgage credit system with fixedLoan-to-Value rate; this will force parties to report real sales prices. (But ofcause, the bank sector will object to a competing financing system, even if therecent financial crisis confirmed the robustness of the Danish mortgageapproach, and it is socially inclusive).

Abstract data from deeds of conveyance, and publish cash sales prices, whichare aggregated into property types, valuation districts and periods, to avoidprivacy objections

Describe the cost and social consequences of not having a good sales statistics(Nobel effort, but perhaps better to join forces with potential readers as a start)


4 Potential role .. 3. Work for documented integrity of the profession

A professional association is a social actor, ..The national configuration may changedue to .. external influences .. [and] .. competition among professional associations.

Handling competition within the domain of valuation:

Specify domains of skills (Licenses for public valuations and for private/ marketvaluations, respectively. Stubkjær, 2009) and

1.

document integrity of professional activity2.


Document integrity: Code of Practise; Liability insurance

The HKMO has a Disciplinary Board and Code of Conduct (TMMOB DİSİPLİNYÖNETMELİĞİ).

Rulings of the Board may be published, analyzed and communicated, to reducerisk and enhance public trust.

The Code of Conduct may be supplemented with a Code of Practise

‘General Conditions for Professional Liability Insurance’, Official Gazette, 16March 2006, institutes among others an Insurance Arbitration Commission

Engagement in the IAC, and publishing of outcome, might improve rulings andprofessional development

Turkey, as a regional power, may support professions in neighbouring countries inenhancing both their position in society and their internal management of affairs.


5. Conclusion

Danish practise reported, partly based on own participation in development andteaching

1.

Professional associations may supplement governmental agencies throughactive network building (municipal information systems, sales statistics)

2.

Professional associations enhance their status in society byproviding relevant services (with adjustments to changing needs)being frank about quality of services and occasional misconductbeing alert as regards standards of professional liabilitycontributing to international exchanges on professional conduct

3.

Thank you.Any later questions: [email protected]


References

Hvolby, Mads & Torsten Christensen (1980) Landinspektøransvar. MScproject. Landinspektørstudiet. Aalborg University.

Lafuente, M. 2009. Public Management Reforms and Property Tax RevenueImprovements: Lessons from Buenos Aires, March 4, 2009, Public SectorManagement Series, Working paper 0209

SKAT (2011) Ejendoms- og grundværdier 2011 for alle typer ejendomme;landsniveau http://www.skat.dk/getFile.aspx?Id=93506

Wilensky, Harold L. (1964) The Professionalization of Everyone? American

Journal of Sociology, 70 (2) 137-158,

Wolters, J. 2002. Property valuation and taxation in Denmark, The DanishWay, The Danish Association of Chartered Surveyors.

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