Regulatory and Legal Framework of the Valuation Profession in Sri Lanka
Regulatory and Legal Framework of the Valuation Profession in Sri Lanka
Domain 4 tests the statutes that create the profession and the statutes valuers work under.
The Institute
The Institute of Valuers of Sri Lanka is a statutory body created by the Institute of Valuers of Sri Lanka Act No. 33 of 1982. Its Council governs the Institute, admits members, registers valuers and handles discipline. Only persons registered under the Act may hold themselves out as registered valuers and sign valuations that a statute or lender requires from one.
Statutes a valuer meets
- Valuation Ordinance No. 26 of 1915: rating valuations for local authorities, based on assessed annual value.
- Land Acquisition Act No. 9 of 1950: compensation on compulsory acquisition - market value at the statutory date, plus disturbance, severance and injurious affection.
- Stamp Duty Act No. 43 of 1982: duty assessed on the higher of consideration or market value.
- Condominium Property Act No. 12 of 1970: units held with undivided shares of the common property.
- Registration of Title Act No. 21 of 1998 and State Lands Ordinance No. 8 of 1942: title and state land.
- Inland Revenue Act No. 24 of 2017: capital gains tax on realisation of land and buildings from 1 April 2018, which requires a value at acquisition.
Worked example
Thirty perches with a house are acquired. Market value of land and building at the statutory date is LKR 12,000,000; severance LKR 800,000; disturbance LKR 200,000. Compensation is LKR 13,000,000. Mixing in the assessed annual value from the rating roll would be an error - that figure serves rating, not compensation.
Traps
- Using the date of the award instead of the statutory valuation date.
- Confusing assessed annual value with market value.
- Claiming heads of compensation the Act does not provide.
- Ignoring title defects discovered on inspection.