The JOINT ORDER of the MINISTER OF JUSTICE of the REPUBLIC OF KAZAKHSTAN of November 21, 2002 No. 173 of the MINISTER OF FINANCE of the REPUBLIC OF KAZAKHSTAN of December 2, 2002 No. 600 of the MINISTER of the INDUSTRY AND TRADE of the REPUBLIC OF KAZAKHSTAN of November 26, 2002 No. 96 of the CHAIRMAN of the AGENCY of the REPUBLIC OF KAZAKHSTAN ON MANAGEMENT of LAND RESOURCES of November 23, 2002 No. 90

About approval of Rules on application by subjects of estimative activities of requirements to evaluation methods of real estate (except for the companies as property complexes)

 

It is approved National Bank Republic of Kazakhstan

According to the order of the Government of the Republic of Kazakhstan of May 27, 2002 N 572 "About measures for implementation of the Law of the Republic of Kazakhstan "About estimative activities in the Republic of Kazakhstan" we order:

1. Approve the enclosed Rules on application by subjects of estimative activities of requirements to evaluation methods of real estate (except for the companies as property complexes).

2. To committee of registration service of the Ministry of Justice of the Republic of Kazakhstan during monthly term from the date of enforcement of this Order to take measures for the organization of its execution.

3. To impose control of execution of this Order on the Chairman of Committee of registration service of the Ministry of Justice of the Republic of Kazakhstan Taymerdenov M. T.

4. This Order becomes effective from the date of state registration in the Ministry of Justice of the Republic.

 

Minister of Justice Republic of Kazakhstan

Kim G. V.

Minister of Finance Republic of Kazakhstan

Kakimzhanov Z. H.

Minister of the industry and trade Republic of Kazakhstan

Esenbayev M. T.

Chairman of the Agency Republic of Kazakhstan on management of land resources

Ospanov B. S.

No. 600 of the Minister of the industry and trade of the Republic of Kazakhstan of November 26, 2002 No. 96 of the Chairman of the Agency on management of land resources of the Republic of Kazakhstan of November 23, 2002 No. 90 are approved by the joint order of the Minister of Justice of the Republic of Kazakhstan of November 21, 2002 No. 173 of the Minister of Finance of the Republic of Kazakhstan of December 2, 2002

Rules on application by subjects of estimative activities of requirements to evaluation methods of real estate (except for the company as property complexes)

These rules are developed according to the Law of the Republic of Kazakhstan "About estimative activities in the Republic of Kazakhstan", are based on provisions of other regulatory legal acts of the Republic of Kazakhstan and establish the main requirements to evaluation methods of real estate.

1. General provisions

1. Rules on application by subjects of estimative activities of requirements to evaluation methods of real estate (further - Rules), open the basic concepts and establish mandatory requirements to evaluation methods of real estate taking into account regional factors, specific conditions of pricing and their reflection in accounting and the reporting, according to provisions of regulatory legal acts of the Republic of Kazakhstan.

2. These rules are intended for application by subjects of estimative activities in the territory of the Republic of Kazakhstan.

3. In these rules the following basic concepts and determinations are used:

1) real estate (immovable things, the real estate) are the parcels of land, buildings, constructions, long-term plantings and other property firmly connected with the earth that is objects which movement without disproportionate damage to their appointment is impossible;

2) market value is the most probable price at which this object can be aloof based on the transaction in the conditions of the competition when the parties of the transaction are effective, having all available information on assessment object, and any force majeure provided by the Law "About Estimative Activities in the Republic of Kazakhstan" do not affect transaction price;

3) other cost:

the discounted cost is the cost determined proceeding from future benefits following from rights of possession real estate object taking into account discount;

investment cost is project cost of the real estate for the specific investor (group of investors) which is connected with current value of the cash flows received from use of real estate object in case of particular purposes of investment;

salvage value (cost in case of forced sale) is the project cost of the real estate which can be received in case of forced alienation in limited terms;

the original cost is the amount of the paid money or their current value established by agreement of the parties, reached at the time of acquisition of real estate object;

realization value is cost assessment of real estate object (taking into account the costs necessary for sale implementation) by which exchange of assets is made or the obligation between informed and ready to carrying out the transaction by independent parties is paid;

the current value is the cost assessment of real estate object established on the basis of application of methods of determination of market or other value of objects for certain date and corresponding to current prices in this market;

the accounting amount (book value) is original or current value of real estate objects (less cumulative depreciation amount) on which they are reflected in the balance sheet (accounting) on reporting date;

4) income approach is application of one or sets of methods of cost determination of the real estate objects based on determination of the expected income from its future reference;

5) cost approach is application of one or sets of methods of cost determination of the real estate objects based on cost determination necessary for reproduction or substitution of the estimated object taking into account depreciation;

6) comparative approach is application of one or sets of methods of cost determination of the real estate objects based on the analysis of sales of objects analogs and comparisons to assessment object for introduction of the corresponding adjustments considering distinctions between them;

7) depreciation is process of loss of physical, functional and other characteristics of real estate objects in time:

physical wear - loss of project cost owing to damages (defects) caused by wear and destructions, connected with service conditions, leaving under the influence of climatic and other factors;

functional depreciation - loss of project cost of assessment as a result of impossibility of implementation of the functions inherent in modern buildings and constructions with advanced architectural, space-planning, constructive or other characteristics;

economic obsolescence - loss of project cost as a result of changes in the real estate market, owing to impact of the environment (ratio of demand and the amount of offers in the developed market caused by state of the economy, demographic situation, solvency of consumers and other regional factors).

2. Evaluation methods

4. Establishment of market or other value is made by application of the evaluation methods grouped in profitable, costly and comparative approaches.

5. Methods of income approach - the methods of cost determination of real estate object based on determination of the expected income from its future reference:

1) method of direct capitalization (method of the capitalized income) cost determination proceeding from conditions of preserving stable use of real estate object, in case of income constant, lack of initial investments, simultaneous accounting of capital repayment and the income on the capital;

2) method of discounting of cash flows (method of the discounted cash flow) - cost determination proceeding from conditions of the change and uneven receipt of cash flows depending on risk degree connected with use of object;

3) other methods provided by the current legislation.

6. Methods of cost approach are methods of cost determination of complete reproduction or substitution of real estate object less all types of depreciation:

1) method of step-by-step calculation - cost determination of reproduction or substitution on the basis of use of collections of the single district single quotations (SDSQ), estimate norms and rules (Construction Norms and Regulations), estimate norms and quotations (the collection of SNIR) and other standard rates, taking into account depreciation;

2) method of the enlarged generalized indicators stoimostiopredeleny costs of reproduction or substitution by generalization of offers on sale of similar objects or on the basis of application of collections of the enlarged estimate standard rates (EESR), the enlarged indicators of replacement cost (EIRC), the enlarged construction cost indexes (ECCI) and other standard rates, less depreciation;

3) other methods provided by the current legislation.

7. Methods of comparative approach - the methods based on the analysis of transactions of sales of objects analogs and comparisons to assessment object for carrying out the corresponding adjustments:

1) method of comparative analysis of sales - cost determination of real estate object by comparison of recent sales of comparable objects with estimated, after accomplishment of the corresponding adjustments considering distinction between them;

2) method of market information - cost determination of real estate object by information analysis about offers and demand in the developed real estate market taking into account location of the estimated object;

3) other methods provided by the current legislation.

3. Requirements to evaluation methods

8. In case of the choice and application of evaluation methods the appraiser shall observe the following main requirements:

1) to identify the purpose of assessment and type of the determined cost;

2) to provide accuracy of the information, used when evaluating real estate object;

3) to carry out the legal analysis, to identify property rights and encumbrances;

4) to prove the choice of evaluation methods;

5) to provide the exhaustive and available statement in the valuation report of reliable data, settlement indicators and reasonable results which is not allowing their ambiguous interpretation.

4. Procedure for evaluating

9. Evaluating is performed in the following procedure:

1) the conclusion of the contract for the evaluating between the appraiser and the customer which is the basis for carrying out estimative works according to the legislation of the Republic of Kazakhstan;

2) inspection of real estate object with departure on the location;

3) collection, processing and analysis of documents, other data on real estate object;

4) choice of approaches and evaluation methods, accomplishment of calculations for establishment of market or other project cost of the real estate;

5) generalization of the results received on the basis of application of evaluation methods and determination of total cost of real estate object;

6) registration and transfer of the valuation report to the customer.

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