Property valuation

The Bill amending the Land Acquisition (Public Purposes) Ordinance presently before Parliament at long last addresses the present dysfunctional method of valuation of property.

Article 17 of the Ordinance states that "... any land which is not a building site shall be valued... as rural land or waste land, as the case may be."

The following article then defines what is building land in terms of the Ordinance. Article 18 (1) states that "Land shall be deemed to be a building-site... if it has a frontage on an existing street and is situated within a built-up area, or subject to sub-article (2), within a distance of not more than 91 and one-half metres of a built-up area, measured along the axis of the street".

Sub-article 2 then defines the criteria further by stating that "In determining whether land is a building-site (due to its proximity to a built-up area as defined above), regard shall be had to the probable immediate expansion of the built-up area in the direction of the land in question".

Sub-article 3 then further defines the above by stating that the building site is to be calculated up to a maximum depth of 25 metres.

All the above was perfectly acceptable when urban development was regulated by key plans mainly consisting of ribbon development with roads at right angles to one another. With the introduction of planning schemes in the 1960s and the setting up of a Structure Plan-based system of development control in the 1990s, with all its ramifications, the contents of these articles became totally anachronistic.

Presently, architects engaged by the owners of the expropriated property established the price through a commonly-used valuation process based on the principle of a willing seller and a willing buyer, and taking all relevant factors into consideration such as location, potential for development (even in areas outside the schemes in certain cases), and current market trends and prices for similar property.

But the architect carrying out the valuation for the Lands Department, as well as the Land Arbitration Board technical members, are bound by the above provisions of the Ordinance when establishing the value. This has often resulted in extremely disparate values which hinder the possibility of a compromise being reached. This holds true particularly for land expropriation rather than for building expropriation.

The provisions at present do not permit much discretion for interpreting the true nature of the property. Taking an extreme case, a plot of land in Sliema, say, which does not have a frontage onto a street, is not deemed to be a building site in terms of the Ordinance whereas a plot of land designated as a traffic island within a built-up area is. Normally one would take into account the demand for land in Sliema in the first case and the fact that the land is schemed as a traffic island in the second. The law as it stands does not allow for this.

With the amendments, the matter will be redressed as the interpretation will fall in line with current practice and allow for more discretion in establishing the true value. Indeed, I would go so far as to say that even the government stands to benefit because a large part of the contentious cases being handled by the Land Arbitration Board concern land which is schemed for road widening. This can now be taken into account in establishing the fair value, and this would be reflected in a lower price than what is set for a building site.

Given this scenario we should be looking at a narrowing of the gap between the values set by the parties, which should do away with the need for recourse to the Land Arbitration Board. I suggest, in fact, that the amendments to the law should also provide for contentious cases to be referred to arbitration rather than leave them to burden the law courts' caseload. After all, it is merely a question of establishing a fair value.

Further effects of these amendments will be felt as the provisions are put into practice but they are certainly a sorely-needed step in providing just compensation for expropriated property.

Mr Pace is president of the Chamber of Architects and a member on the panel of the Land Arbitration Board.