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WHAT YOU SHOULD KNOW ABOUT THE STANDARD LAND VALUE!
When it comes to the price of plots in a particular area and the question of what influences the purchase price there, the standard land value gives an answer. Clearly, but without being binding, this value gives buyers and sellers important reference points for determining the land value of a plot in a particular location. However, it is not the only decisive factor for the land value, as many factors play a role in the end.
WHAT EXACTLY IS THE STANDARD LAND VALUE?
The standard land value is an official average value. For a particular area it states the value or price of one square metre of land. In property valuation it serves above all as an aid when the comparative value method cannot be used.
It is also the basis for the tax assessment of land. The standard land value relates to the respective standard land value zones. These can cover streets or rows of streets, districts or entire towns.
HOW IS THE STANDARD LAND VALUE DETERMINED?
Section 196 of the German Building Code sets out exactly how standard land values must be calculated. According to it, the average of officially collected purchase prices for plots in the respective region forms the basis. These collections of purchase prices are compiled on the basis of notarised property purchase prices.
Property sales in Germany must be reported. The average price per square metre of land is then calculated from the prices actually achieved.
Depending on the federal state, standard land values are determined at different intervals. In practice the value is drawn up and published at least every second year on a particular reference date, usually 31 December or 1 January of a year.
The standard land value map is drawn up from the standard land values. It exists for all districts, independent and district towns, municipalities and localities, and for the town districts in the Federal Republic of Germany.
Interested parties can obtain information on standard land values from the offices of the competent valuation committees (Gutachterausschüsse).
HOW MEANINGFUL IS THE STANDARD LAND VALUE?
As the term "guide value" suggests, standard land values are only simplified bases for valuing properties and plots. It is therefore essential to take further factors into account when valuing plots.
Factors influencing the value include:
- The condition of the soil
- Whether a plot can be built on, e.g. with regard to its shape and a development plan
- The degree of development, e.g. with regard to water, sewage, gas and electricity
- The surroundings
- The location
The location of a plot in particular – urban, rural, in demand – can influence the standard land value positively or negatively. Besides good amenities and excellent infrastructure, factors such as the neighbourhood also have a positive effect.
HOW DOES THE STANDARD LAND VALUE DIFFER FROM THE MARKET VALUE?
The market value of a plot or property shows what price it would achieve when sold, based on the market situation and current demand. The standard land value, by contrast, is a rather generalised base value. It can of course serve as a basis for calculation.
However, as it is often only determined every two years, it is usually out of date. It cannot take into account factors that influence the value of a property. It is therefore usually well below the actual market value of the property.
THE ROLE OF THE STANDARD LAND VALUE FOR THE LAND VALUE
The standard land value must not be equated with the market value. Nor does it have anything to do with the actual value of the land. So it says nothing about the value of the land or the plot.
The guide value often even differs considerably from the actual value, because depending on the plot, very different factors can influence its value. The land value is determined most strongly by how well the plot can be built on and how much living space can be created.
The value of a plot rises with the size of the living space that can be built on it and with the price this space achieves on the market. The value of a plot should therefore be determined separately before a sale. It should on no account simply be based on the standard land values.
HOW IMPORTANT IS THE STANDARD LAND VALUE WHEN SELLING A HOUSE?
In a normal house sale, the standard land value plays no role at all, or at most a minor one. On the contrary: plot values and thus property values are often very far above the standard land values. Sellers should therefore not carry out a valuation on the basis of standard land values.
A house is usually valued using the comparative value method. This means that an expert, such as an estate agent, views and values the property, bringing his knowledge of current market activity and comparable properties into the valuation.