“The entire market can be influenced.” How to interpret a real estate expert the Government's decision to radically change the assessment of the furniture confiscated by the communist regime

The government wants to change, by emergency ordinancethe evaluation of the buildings confiscated by the communist regime, a decision that “distorts the market and is discriminatory”, says, in a dialogue with Hotnews, Daniel Crainic, the marketing director of a real estate ad portal in the country.

The draft Emergency Ordinance, initiated by the Ministry of Finance, the General Secretariat of the Government (SGG) and the National Authority for the Restitution of Properties (ANRP) has already received favorable opinion from the Economic and Social Council (CES) and are the Government's Friday agenda.

“The value of a building is not given by the fact that it was confiscated or not by a regime”

“It is indeed complicated to intervene on a restricted segment of properties. The value of a building is not given by the fact that it has been confiscated or not by one or another, therefore a certain category should not have specific criteria. Regardless of the history of a building, its value is given by the location, economic potential, etc. Crainic, Marketing Director of Imobiliare.ro.

He also says that “local, if there is a critical number of such properties on a particular segment, the entire market can be influenced.”

It also draws attention that new evaluation criteria can “create a visible discrepancy”, “if they do not take into account an objective evaluation applicable to the whole market”.

“The application of a GEO on a limiting number of buildings with direct repercussions in establishing their value of course that the market distorts and is discriminatory. These properties are part of the real estate heritage and normally their value should be given to the market,” continued Daniel Crainic.

What can be the solution

The solution, he says, can be a unitary evaluation system at national level, applicable to all properties.

“A unitary evaluation system at national level, which eliminates the inequities of the current notarial grids and apply to all properties (residential, commercial, land, etc.), should be transparent, digitized, updated and take into account objective market parameters,” says Daniel Crainic.

He says that this system should have quantifiable, comparable and verifiable criteria, which reflect the real market value of a property.

“These parameters are: location (city/area/neighborhood/distance from means of transport, area development index, proximity to interest points), characteristics of the property (type, surface, status, equipment level, etc.), quality of construction/land – general status, building materials, equipment, certifications; the evolution index of the area;

What inequities are now in the grids of notaries at housing prices

In the note of foundation of the project of GEO, it is emphasized that “at present, the notarial grids have different criteria for establishing the value of the buildings, criteria which, in some cases, lead to different values for the same type of buildings”.

“Specifically, when establishing the value of the constructions in counties such as Mureș, Harghita, Cluj, Sălaj, Bistrița, Satu Mare, Hunedoara SA there are no correction coefficients according to their age, while in the case of buildings in Bucharest and counties such as Timiș, Constanța SA there are such coefficients.

When establishing the value of the lands, the notarial grids related to the municipality of Timișoara, Cluj Napoca, Oradea, Constanța, etc. They have established different unit values depending on their surface, and in the grids related to the municipality of Bucharest, Bacău, Ploiești, Brașov such a criterion is not provided, but certain correction coefficients are provided, depending on the category of use of the land ”, the document shows.

For these reasons, say the initiators of the normative act, the equitable solution is that, in the process of establishing the damages, the criteria for applying the correction coefficients, where appropriate, to be unitary, by taking into account the current category of use of the buildings.

“In order to avoid an enrichment without just cause, it is necessary to make differences taking into account the surface of the lands, the category of use, the period in which the constructions were built, the materials used to build them and their destination. This modification eliminates the inequities produced by the evaluation criteria established by the grids All the parties involved in the restitution process, respectively the Romanian state, through the National Authority for the Restitution of Properties, the citizens to whom the courts are addressed, where appropriate ”, is mentioned in the foundation note.

What unitary unitary criteria propose the Government in evaluating the buildings confiscated by the communist regime

In order to ensure the fair character of the damages that the state grants to the former deposed owners, the authorities say that it is necessary to adopt a set of general-valable criteria for the entire territory of Romania.

Thus, according to the project of the GEO, the evaluation of the buildings for which damages are granted will be done by applying the notarial grid valid for the previous year of issuing the decision by the National Commission by reference to the area and category of building in the respective locality and with the application of new unitary criteria, at national level, for applying the grid.

The new criteria will use the guidance price of trading from the notarial grids, updated annually, to which specific correction coefficients will be applied.

In general, correction coefficients are used by evaluators to adjust the reference price of a property according to various specific features. A value greater than 1.0 (for example, 1.2) would increase the price, while a subunit value, such as 0.7, decreases.

“When establishing the correction coefficients, they were considered an average of them, as provided in the notarial grids from 2013 to the present. The correction coefficients use represent multiplicators or adjustment factors, applied to the basic value of a building (land, house) to correctly reflect the value of the market, taking into account the peripheral, rural), endowments and finishes, seniority and state of construction ”, according to the foundation note.

How will the prices be changed at housing and land

In order to establish the new correction coefficients at the price of housing, it was taken as a landmark 1977, because after this date new construction standards were introduced, influenced by industrialization and the evolution of materials.

“Currently, the grid of public notaries in the municipality of Bucharest provides different values for the constructions built before and after 1977, and the average difference between these values is about 30%”, the document shows.

Properties whose value will decrease

• Old dwellings built before 1977: All buildings in this category will be evaluated with a correction coefficient of 0.7. This measure will lead to a reduction in value by 30% compared to the reference price.
  In other words, if the price of a house built before 1977 is now 100,000 euros, its value will fall to 70,000 euros. Thus, the owners of old housing in cities where such a coefficient is not already applied (such as Mures, Cluj or Sălaj) will find a significant decrease in the estimated value.

• Houses made of traditional materials (Word, Wood): Their value will be drastically reduced by 50% (coefficient of 0.5), reflecting the lower quality and durability.
• Large, urban lands: Lands of over 1,000 square meters will be evaluated with one value per square meter. The correction coefficients will vary between 0.8 (for areas over 1,000 square meters) and 0.2 (for over 10,000 square meters). Thus, the total price of a high land will be considerably lower than the amount obtained by multiplying the surface with the standard unit price.
• Agricultural land with low productivity: Forest land, hay, pastures or non -productive ones will be evaluated with much smaller correction coefficients than arable land. Thus, their value will decrease, reflecting less profitable economic use.

Properties whose value could increase

• Commercial spaces: While residential properties are evaluated with subunit coefficients, commercial spaces will benefit from a correction coefficient of 1.2. This 20% increase reflects the higher market value of these buildings, due to their potential to generate income. The owners of commercial spaces can benefit from a more favorable evaluation than in the old grids, where the differences were less pronounced.
• VII and Livezi: Lands occupied by live and orchard will be evaluated with higher correction coefficients (1.4 and 1.2 respectively than standard agricultural lands, such as arable land (correction coefficient 1), due to initial investments and profit potential. Thus, the value of these properties will increase, especially in areas with a wine or pomicol tradition.