Computation of Variance in Rateable Value - A Review

Abstract

Valuation has been defined as both art and science of estimating the worth of interest in a property at a particular point in time and for a specific purpose. While the science is more of exactitude; the art is more of guess works based on the knowledge and experience of the valuers on subject property of valuation. To this extent, there are tendencies that there would be variance in the compared values of a property as submitted by two or more valuers having undergone the process of property valuation. Several studies on non-statutory valuation have used different techniques and approaches for the computation of valuation variance that are either weak, non-reflection of the definition of variance or inconsistency in the approach. This study therefore reviewed the various techniques and approaches of computing the variance of rateable value; a statutory valuation using extant literatures, decided cases and related case studies on variance of rateable value. The findings show that out of the seven techniques that were identified, the margin of variance technique seems to be a strong technique as it reflects the definition of variance. Furthermore, it shows that there are four approaches to the determination of margin of variance and the approach that is consistent in its application was recommended for the computation of rateable value variance.