The act was developed to establish a “just, equitable, impartial, and nationally consistent real property valuation.”
Recently, the Joint Foreign Chambers (JFC) wrote a public letter urging the Senate to approve a bill establishing a uniform standard for the valuation of real estate. Currently, government agencies, local government units (LGUs), and private and public property appraisers use different sets of standards to determine costs and values. These multiple standards usually result to confusion, conflict with pricing and taxations, and problems of transparency. The legal framework backed by the business community is set to reform the current norm using international practices.
According to the Congress’ approved version of the bill, HB 5288 or the "Real Property Valuation and Assessment Reform Act,” was developed to establish a “just, equitable, impartial, and nationally consistent real property valuation.” The standardization will be “based on internationally accepted valuation standards, concepts, standards, principles, and practices.
While the bill has several objectives for this reform, these are the three most notable policies of the act:
The BLGF will develop and implement the guidelines
According to the House’s approved version, the act should “promote the fiscal autonomy of local governments to provide basic services to their constituencies by enhancing their capacity to generate local revenues from real property.” The Bureau of Local Government Finance (BLGF) will lead and manage the implementation of the act.
The bureau will be given the power to develop, adopt, and maintain valuation standards that are based on generally accepted international practices. Its regional offices, meanwhile, will be responsible for matters of valuation and appraisal in their regions. The regional offices will review the standard values backed by the local government’s assessors.
Taxation, appraisal, and transactions will be based on market value
The act will adopt market value, as the single real property base for the assessment of real property taxes, and valuing or appraisal.
A standardized schedule of market values (SMV) will be formulated by the assessors of the local government. Local assessors shall prepare the SMVs for the different classes of properties within their respective LGUs. The SMVs will adhere to the standards and guidelines created by the Department of Finance (DOF) and the BLGF.
The SMVs will be used for the general revision of real property assessments in LGUs. These localized SMVs will be the basis for the determination of real property related taxes imposed by national government agencies. It will also be the benchmark for real property appraisal for other purposes.
A real estate electronic database will be developed
HB 5288’s policies include the development of an electronic real estate database. The BLGF and its local offices are responsible for building the comprehensive database and keeping the information up-to-date. The database includes records on any and all real estate transactions, whether from the national government, local government, or private sector. In addition to this, the database will also have information on the cost of construction and renovation of buildings and other structures, as well as prices on machinery.
The updated electronic database will be open to all sectors concerned.
The JFC addressed the letter to Senator Juan Edgardo Angara, the chairman of the Committee of Means and Ways. The letter explained that due to the current developments in the real estate market, there is a great need for a stronger regulatory framework. “Similarly, opportunities created by ASEAN integration and other economic advances require that valuation of real estate is carried out based on international standards,” they added. The JFC also stressed that with the country’s growth, the passage of reforms such as HB 5288 is integral “in maintaining a vibrant and dynamic economy.”
As of writing, the Senate scheduled a public hearing on May 13, 2015 to deliberate on the Real Property Valuation and Assessment Reform Act among other proposed bills.
For consumers, the passage of the valuation reform act can make it easier for both parties to determine the real costs of property transactions, such as selling and buying a home, or calculating their real estate taxes.