By Marlon Madden
The General Insurance Association of Barbados (GAIB) and the Barbados Estate Agents and Valuers Association (BEAVA) Inc. have welcomed news that the government plans to introduce new valuation legislation to ensure a more standardised process for valuing land and property in Barbados.
Minister in the Ministry of Finance Ryan Straughn recently announced that in addition to bringing valuation of property for insurance, land tax payments and property sale more in line with each other, the regulations would make provision for a house price index to better document sale of property across the country.
BEAVA President Arthur Ramsay told Barbados TODAY the changes would help speed up transactions.
“It should help bring clarity on the values in the marketplace because of the information that you will be able to access . . . . What they are looking to move towards is a full registration of titles within the country,” he said.
“Whereas the lawyers had to take longer time to do searches to confirm the property is free and clear from debt, encumbrances – a mortgage outstanding and things like that – once they go through the process of registering these lands and properties, when it comes to transferring of titles it would be a lot faster so the transactions should move a lot quicker.”
He said this meant greater efficiency and benefit for all those involved including the government, property owners, real estate agents, and property sellers and buyers.
Ramsay said that having access to the information in one place further helped with better valuing of properties in the same or similar location.
“With the absence of that data, it leaves too many things for your own interpretation. If you have the experience that is great, but the average person may not always have that experience and that can affect the values you end up with,” he said.
Ramsay said that overall, BEAVA members welcomed the move but some were of the view that “it may not happen in the short to medium term”.
Straughn had indicated that the Government will be moving full steam ahead with the digitisation of the land registry, which he said should significantly reduce the time it takes for the exchange of information and to close a transaction to between seven and 14 days.
Ramsay told Barbados TODAY this might be an ambitious target but any reduction in the current time it took to settle a transaction would be welcomed since this would allow the real estate industry to better plan, as well as benefit all other parties, including the buyer, seller and the bank.
“To a situation where you are looking to seven to 14 business days to get the transactions turned around, I am not sure with the current set-up it will be feasible to get that done, but even if we can cut it down from what it is now – which is usually three to six months on average and sometimes six months to a year in an extreme situation – it would make a big difference to the real estate market,” he said.
Meanwhile, GIAB President Randy Graham said the new evaluation law should help with confidence in the market among insurance companies and individuals.
“Whenever we have standards, it gives the public confidence that there’s a logic behind what’s being done and we can compare one against the other with some kind of basis, and that gives confidence to the market. So the insurance sector is happy to hear there is standardisation,” he told Barbados TODAY.
Even with this standardisation, Graham said, it should be expected that there will be differences in the valuation for insurance purposes, land tax purposes and the sale of a property.
He explained that the cost for insurance is calculated based on the rebuilding cost of the house, plus several other costs including the requirements of building code, architect fees, engineering fees, materials and labour costs and any other requirements for the rebuilding.
“What the insurance is typically interested in is how much will it cost you to rebuild your house today. The reason why insurance is interested in that is that is how much money we expect to give the client so they could rebuild their house,” said Graham.
He said if insurance was based on a valuation when the house was first built, that would leave the homeowner with a lot less money from the insurance company to rebuild in the event of a catastrophe.
In this regard, he said a lack of up-to-date valuations was resulting in many properties being underinsured.
“If you build your house and it was 1 000 square feet and cost you $100 000, 10 or 20 years ago, it could very well cost you $200 000 to rebuild the same house now because of increase in building materials, increase in fees and because the building codes now require you to have a water tank and other [fixtures],” he said.
Graham said he also hoped the changes announced by Straughn would come “sooner rather than later”.
