Valuation of rural and urban land
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Valuations of rural and urban land for any purpose
Purchase and sale transactions
An appraisal ensures that the transaction price reflects the actual value of the land. In rural transactions, where multiple variables such as agricultural use, buildability, and location come into play, a professional appraisal protects both the buyer and the seller.
Contradictory assessment or before the Tax Agency
It allows you to challenge tax assessments that do not reflect market reality. If the tax authorities assign a value higher than the actual value and this results in higher taxes, an official appraisal serves as a defence tool in tax proceedings.
Inheritance or separation
Ensures a fair and technically supported distribution of rural assets. In inheritance or property division situations, an objective appraisal prevents disputes and facilitates agreements.
Expropriation
It is essential for defending the real value of the land before the Administration. In expropriation proceedings, the appraisal allows for claiming adequate and technical compensation.
Non-monetary contribution to a company
The appraisal certifies the value of the land when it is incorporated as a corporate asset. It provides transparency and regulatory compliance in commercial processes.
Mortgage guarantee for loans
It is essential for a financial institution to accept the property as collateral. It establishes the mortgage value of the land, facilitating access to financing.
Assets for Collective Investment Institutions or Pension Funds
It allows rural assets to be valued within regulated investment vehicles, complying with transparency and auditing requirements.
Coverage of technical insurance provisions
It is used to value properties that form part of the technical backing of insurance companies, in accordance with the requirements of supervisors and auditors.
Benefits of rural and urban land valuation
Official report valid for banks and public bodies
Accepted for mortgage valuations, inheritance and divorce proceedings
Approved appraisers throughout Spain
Personalised advice and prompt service
Over 40 years of experience in property valuation
What documentation is required to value rural and urban land?
We will provide you with personalised advice on the documentation required to prepare the office valuation report, which will depend on the purpose of the assignment. The most commonly used documents are:
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Registry certification, updated simple note or deed.
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Urban planning certificate, that is, the document that certifies the urban planning regime and circumstances to which a property, plot or lot in a municipal area is subject.
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Cadastral reference number.
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Plans or topographical survey of the property if available.
Factors influencing the valuation of rural and urban land
Location of the property
Condition of the flat or house
Surface area, layout and materials
Common services and views
Energy certification
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Basic concepts regarding the valuation of rural and urban land
Having your land valued by an approved valuer such as Gloval will help you to ascertain its value and will become a reliable tool for decision-making in business management. Here are some of the reasons why you might need an Official Valuation Report for a piece of land:
- Developers who require land valuation
- To make tax claims
- For the sale and purchase of land
- Reports on improving land profitability
- Feasibility reports
- Asset regulation
These are the main factors we will take into account when appraising land or plots:
- The type and surface area of the land or plot
- The location of the land
- The topography and morphology of the soil
- Its urban situation
- Whether there are any limitations or restrictions on use or municipal or regional regulations
At Gloval, we appraise all types of land, such as:
• Urban Land Appraisal
Urban land is a plot that IS ready for immediate construction. It has basic municipal services, such as drainage, water supply, and electricity.
• Development Land Valuation
Development land is a plot that is NOT ready for immediate construction. In order to be built on, it requires urban planning and development of the area in which it is located.
Appraising land or parcels means preparing a report to evaluate or determine the economic value of said real estate. This process is essential in real estate transactions, financing procedures, expropriation proceedings, or leasing. The value can depend on various factors, such as:
- Location: The area where the land is located.
- Physical characteristics: The size of the land or plot, its morphology, and topography.
- Accessibility: The ease of accessing the land, such as roads or infrastructure.
- Urban planning status: Urban planning classification and application parameters.
- Land use: The type of use permitted (residential, commercial, industrial, etc.).
- Land conditions: Possibility of contamination, urban planning charges, whether it has any buildings that need to be demolished, etc.
- Real estate market: The current state of the market in the region (supply and demand), which also affects the estimated construction timeframes. Land.
The determined value is used by buyers, sellers, lenders, management, and tax authorities, among others, to make decisions related to the property.
Commissioning a land appraisal is important to obtain an objective market valuation, which is necessary in sales transactions, mortgages, inheritances, divorces, and other cases, or to determine its best use in accordance with applicable zoning conditions.
Reasons to appraise a land:
Sale: An appraisal establishes a fair, market-based price, which helps make informed decisions, streamlines the transaction, protects the buyer from overpaying, and allows the seller to maximize their investment.
At first glance, it may seem that certain criteria are sufficient to value a land, such as its initial cost and the price of similar properties in the same area. This can help provide an estimate of the approximate value of the property. However, to know its true value and set a fair, market-based price, an appraisal is required. This is a legal document that certifies an accurate and objective valuation in today’s real estate market.
In short, whether selling, leasing, or monetizing a property, it is essential to appraise the land to determine its value and intended uses. In addition to increasing the credibility of the offer, it can reveal issues that may need attention before the transaction.
Mortgages/Loans: An appraisal provides the bank with a guarantee for granting loans and is essential for the bank to determine the value of the property as collateral and establish the amount of the mortgage loan.
Inheritances/Divorce: An appraisal helps distribute assets equitably, providing an objective basis for resolving disputes and ensuring that all parties are treated fairly.
If you inherit land whose usability or potential for development is unknown, it is advisable to have an appraisal conducted to determine both its real value and your expectations, and thus determine the best use for it, whether urban, developable, or non-developable (rural).
Other reasons: An appraisal is required for the calculation of certain taxes, such as the Property Transfer Tax or the Inheritance and Gift Tax, and for other legal processes such as seizures, etc.
The main difference in the valuation between rural land and urban or developable land lies primarily in the construction potential and the services and infrastructure available on the land.
Thus, it is divided into:
- Urban land: This is land that is provided with all basic urban services (water, electricity, sewage, road access) and is suitable for direct construction according to municipal regulations.
- Developable land: This is land designated for future development and does NOT yet have basic urban services; therefore, some relevant urban development action is required for its transformation.
- Rural land: Any land that is neither urban nor developable. This land is designated for agricultural, forestry, livestock, or protection uses. It has severe limitations on building, with very specific exceptions.
In short, the value of a piece of land is directly linked to its development potential. Rural land is usually not freely buildable (with some exceptions) and lacks infrastructure, which means its profitability is subject to long-term exploitation or ownership. A development plot has a medium appreciation potential if developed. And an urban plot, because it already has all the services, has a faster direct return, since, in most cases, construction can begin immediately, following regulations.
Different methods are used to value a piece of land, depending on its characteristics, its current and future use, and the applicable planning regulations.
Comparison Method
This method is based on searching for recent sales transactions for land with similar characteristics and adjusting them according to its surface area, location, shape, access, or available services.
It is primarily used when the market is active and there are sufficient references, and it is applicable to both urban and rural land.
Residual Method
It is based on the potential value of what could be built on the land and deducts all necessary development costs (development, licenses, construction costs, financing, developer profit, among others).
The real potential of the land must be analyzed and the value calculated prudently. It is important to apply planning regulations and consider the highest and best use permitted.
It is primarily applied to urban plots and developable land; it is not used on rural land.
The residual method has two variants: static residual and dynamic residual.
Static residual
Immediate land development is considered; execution or financing periods are not taken into account.
Dynamic residual
Land development is considered, considering execution and expenses distributed over time.
Income discount method
Land is valued based on the income it can generate, converting these future incomes into present value using a capitalization rate.
It is most commonly used on agricultural, forestry, or livestock farms, where productivity and profitability of the land are the key criteria. It is also used on leased land, based on market rent.
It is primarily applied to rural land with economic exploitation or the capacity to produce regular income.
Other Methods
Cadastral Method
This is the value assigned by the General Directorate of Cadastre, calculated according to its own regulations.
Its value is determined based on land with similar characteristics and correction coefficients are applied.
Expropriation Method
Valuations carried out within the scope of Royal Legislative Decree 7/2015, of October 30, must comply with the criteria and methodology recognized in said regulatory framework.
The time required to prepare a land valuation report will depend mainly on the nature of the land and the accessibility of urban planning information.
It is also important to have the necessary identification documentation (deeds, simple notes, cadastral references, etc.) available from the outset.
For land located within the consolidated urban area and directly buildable, the approximate time required for preparation would be 10 working days.
When the land is located in an area subject to urban development (unconsolidated urban land, developable land), the deadlines will be closely linked to the response time of specific urban planning queries made to the technical services of the local councils.
In these cases, the provision of a Certificate of Urban Development issued by the local council within a period of less than 6 months could help to shorten the completion time.
Home and land appraisals are similar processes in that their objective is to determine the value of a property, but they also differ in key aspects, determined by the characteristics of the property type.
The most important ones are listed below:
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- PURPOSE:
a) Housing: A built-up area is valued, and aspects such as surface area, age, quality of materials, state of repair, room layout, location, and available services can be assessed.
b) Land: The intrinsic value of the land, without buildings, is taken into account using specific methods according to its classification (urban, rural, developable) and considering factors such as location, qualifications, infrastructure, ease of access, applicable planning regulations, and its potential for future development.
- PURPOSE: The valuation of homes or land does not imply that they have completely exclusive purposes, although, depending on the type of property, some purposes tend to be more common:
a) Housing: sales, mortgages, inheritances, insurance, etc.
b) Land: real estate projects, urban development, investment, expropriation, property management, etc.
- VALUATION:
a) Housing: the current value of the property is taken into consideration.
b) Land: the potential of the land is taken into consideration according to the permitted use and buildability.
- MARKET INFLUENCE: The main ones for each typology are:
a) Housing: Supply and demand for the typology being valued.
b) Land: Status of urban planning and local regulations.
- COMPARABLES:
a) Housing: There is usually an adequate availability of comparable properties similar to the property being valued.
b) Land: The availability of comparable properties for land is considerably lower, especially in the case of land valued with urban planning expectations.
- VALUATION METHODS:
a) Housing: The primary valuation method is the Comparison Method. In the case of a lease, the Rent Adjustment Method is also used.
Factors to consider:
- Property characteristics: size, surface area, layout, number of bedrooms and bathrooms, views, common areas, etc.
- Property condition: age, quality, renovations completed, and state of repair.
- Location: the area, proximity to services (transportation, shops, schools).
- Market conditions: current real estate market conditions and the supply of similar properties.
b) Land: For land, it is important to differentiate between land that can be valued considering its development prospects (land considered Level I by the ECO Order) and urban and developable land, divided into sectors with defined parameters or already under development, and those that cannot, such as non-developable land, non-developable land, or land divided into sectors without defined parameters (land considered Level II by the ECO Order).
In the first case, the main method is the Residual method, applying Static Residual in the case of built-up land or land where construction can begin in less than one year, or Dynamic Residual for the remaining land.
In the second case, the Comparison and/or Rent Update methods are applied.
Factors to consider:
- Physical characteristics: surface area, topography, shape, etc.
- Land classification as urban, developable, or non-developable (rural) land
- Classification: permitted use(s).
- Buildability: For urban or developable land, the principle of best and greatest use is fundamental.
- Location: location within an urban or rural area and proximity to services (transportation, shops, schools). On rural land, climate and soil quality are key.
- Infrastructure: Availability of basic services such as water, electricity, and sanitation is important, especially on urban land. For rural land, proximity to roads or the existence of irrigation rights are key.
Not initially, but it is important to note that the quote includes a technical site visit and is calculated on a personalized basis using the data you have provided. The final price may vary if there are any changes.
The validity of an appraisal depends on the context in which it is used. The purpose of a land appraisal may involve changes in both the methodology and the verifications to be performed, so generally speaking, it is not equally valid for different purposes. Therefore, the appraisal value may be different.
- Mortgage appraisals are regulated by Order ECO/805/2003, and the requirements are stricter.
- For a purchase and sale, the appraisal requirements are flexible. Although there is no formal expiration date, it must be updated as of the date of the purchase and sale to reflect a fair market value.
However, if the purchase is to be financed with a mortgage loan, it is advisable to conduct a mortgage appraisal from the outset to avoid double expenses and to ensure that the purchase financing will be covered. - An inheritance appraisal can serve two purposes: for tax purposes, to calculate taxes, and to distribute the inheritance equitably among several heirs, if there is more than one. The appraisal report should reflect the value on the date of the deceased’s death, not on the date of issue.
- An appraisal for a development project is used to evaluate the economic viability of the project, as part of investment or financing studies.
The appraisal value will depend on the planned development project.
Conclusion
An appraisal report is not always suitable for all purposes; each purpose may require a different approach and possibly a different appraisal, tailored to the specific use.
The existence of land liens or encumbrances on a property can significantly influence its appraisal, as they can affect the value or limit the owner’s rights, as they can restrict the sale, disposition, or use of the property.
Before understanding how they affect the property, it is important to define what land liens or encumbrances are. They are obligations, limitations, or legal impacts on the ownership of a property registered in the Property Registry, and therefore can limit the owner’s use and enjoyment of the property.
Some types of liens are:
- Mortgages: A lien that secures the fulfillment of a debt, usually associated with a home purchase loan.
- Liens: Liens imposed for unpaid debts that may affect the property’s ability to be sold.
- Usufructs: Rights of use and enjoyment of a property by a third party, independent of the owner.
- Easements: Rights that allow one person to use part of another’s property for a specific purpose.
Now that we know what they are and their main types, we can better understand how they can affect the appraisal of a piece of land.
Here’s how and why:
- Reduction in market value
- Land with encumbrances does not have the same value as land free of them.
- A potential buyer would pay less if they knew there were legal limitations that prevented full use of the land.
- Limitation on use or exploitation
- If there is an easement, for example, it may prevent construction on a certain area.
- If it is mortgaged, it cannot be sold without canceling or subrogating the mortgage.
- If it is leased long-term, the buyer will have to respect that contract, which can also affect the value.
- Higher risk to the Buyer
- Land with pending liens or lawsuits is less attractive, so there is a future risk that negatively impacts the value.
- Costs associated with the cancellation of liens
- If debts must be paid or rights cancelled to free the land of liens, this cost is subtracted from the final value considered in the appraisal.
- The mere act of canceling a lien in the registry (for example, a mortgage already paid off) entails administrative costs, time, and management expenses.
Liens or encumbrances can reduce the appraised value of a piece of land, as they affect its use, availability, and market appeal.
To understand how liens affect a particular property, it is necessary to have an appraisal report prepared by a specialized company, which can analyze them to reflect the true value.
When a land appraisal is carried out with unlicensed buildings or pending permits, this circumstance can significantly affect the appraisal value and delay or hinder the development of the land.
Below are some aspects to consider:
Valuation of Unlicensed Buildings
- Unlicensed or unregistered buildings are often not fully valued.
- The appraiser may:
- Exclude them completely from the value.
- Or value them as buildings without legal value, sometimes assigning them a residual or partial value (for example, demolition value or unconsolidated improvement).
- In general, they are not considered valid for mortgage purposes or for calculating the security value of a loan.
Legal Risks
- If there are unlicensed buildings, there may be a risk of:
- Fines or administrative sanctions.
- Demolition by the planning authority.
- Obstacles to a purchase or mortgage.
- It can also affect the marketing of the property, as many buyers or financial institutions do not accept properties with zoning irregularities.
Yes. Within the field of property valuation, we specialise in issuing valuation reports for expropriation proceedings, as well as all types of valuations for urban planning purposes. Both cases fall within the scope of Royal Legislative Decree 7/2015 of 30 October, which approves the revised text of the Land and Urban Rehabilitation Law and Royal Decree 1492/2011, of 24 October, which approves the Regulations on Valuations of the Land Law, and must comply with the criteria and methodology recognised in this regulatory framework, supplemented by the relevant regional regulations on land use planning.
How do you request a valuation for rural and urban land?
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Request an online valuation of your rural and urban land
Complete the form in just 2 minutes and get an instant quote. You can sign up directly online and you will receive an email with the list of documents needed to start the valuation without any complicated procedures.
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We will arrange a visit to your rural or urban property in less than 24 hours.
We will contact you promptly to arrange an appointment with an approved valuer. We will adapt to your availability and answer any questions you may have to ensure that the process is quick and convenient.
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Receive the official valuation report by email
The delivery period of 8 to 10 business days will begin once the quote has been formally approved, the site visit has been completed, and all required documentation has been submitted. This period may be affected if additional inquiries to public agencies (City Hall, Land Registry, etc.) are required as part of the process.
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