In our everyday dealings with clients, we have noticed that there are a number of people who are not familiar with what we do as a Property Valuer or property valuations. Obtaining a valuation is not something you will do every day, but most of us will require a valuation at some point in our lives.
We are Registered Property Valuer with the Malaysia Board of Valuers, Appraisers, Estate Agents and Property Managers. The following is a brief explanation about roles of property valuer and the purpose of valuations. It is important to attain advice from a qualified professional property valuer.
Property Valuer Roles
The 6th Edition of the Malaysian Valuation Standards (MVS 2019) stated that only Registered Valuers shall carry out valuations and provide such service for a fee. This is provided for under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (as amended). In addition, he must ensure that he has the necessary qualifications, sufficient knowledge and expertise when accepting valuation instructions. Past, present or foreseeable future relationships, either with the client or the asset/property to be valued, that could lead to or be construed as possible conflicts of interest, must be disclosed when accepting an instruction for valuation.
The Malaysian Valuation Standard 1 about “Qualifications of Valuers and Conflicts of Interest” ensures that only Valuers who have sufficient knowledge, skill and expertise to complete the valuation competently can carry out valuations.
Statements of Standard MVS 1
- The Valuer, prior to accepting an instruction to carry out a valuation, must ensure that he is a Registered Valuer under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (as amended) and has sufficient knowledge and competency to complete the assignment in accordance with these Standards or generally accepted valuation principles.
- Where the circumstances by virtue of legislation or requirement by any regulatory body or otherwise require an “Independent Valuer”, such a Valuer shall be one who has no, either directly or indirectly, via partners, co-directors or close family, significant financial interest in the client’s company or vice versa. Valuers preparing Valuation Reports for submission to the Securities Commission Malaysia and/or Bursa Malaysia Securities Berhad must also ensure that they meet the definition of an “Independent Valuer” as defined under the Asset Valuation Guidelines issued by the Securities Commission Malaysia and are required to give a declaration to such an effect.
- A Valuer must not accept an instruction to carry out a valuation of an asset/property if he, or his firm is involved in the sale or purchase of the asset/property, in the capacity of an agent, within one year of the completion of the sale or purchase.
- The Valuer must disclose any past, present or foreseeable future relationship with either the asset/property to be valued or the client that may lead to or be construed as possible conflict of interest.
- The Valuer must also ensure that he meets any other legal or regulatory requirements, which may be required by the client, their advisors or other relevant regulatory bodies.
When do we need Property Valuation?
As registered property valuer, we also need to provide valuation and consultancy for Compulsory Acquisition, Compensation Claims including appearance as expert witness in judicial proceeding, Rental Reviews, ‘Going Concern’ Valuation and valuation for Rating purposes for Local Authority.
Purpose of Valuations
- Sale and Purchase of Investment
- Auction
- Mortgage, Credit Security
- Government Declaration Requirements
- Fire Insurance
- Liquidation
- Receivership
- Taxation
- Corporate Accounting
- Submission to the Securities Commissions Malaysia
- Land Acquisition
Malaysian Valuation Standards
Malaysian Valuation Standards (MVS 2019) comes with nineteen standards and two introductory chapters.
The introductory chapter commences with definitions of terms and words used in the standards. This is to ensure that the terms are used correctly so as to minimize ambiguity.
The second introductory chapter is on General Valuation Concepts and Principles normally used in the valuation profession. Concepts are explained so that the valuer and other users of the standards are clear about the concepts and principles that are being used. Some of the concepts discussed are “Land and Property Concepts”, “Real Estate, Property and Asset Concepts”, “Price, Cost and Market Value”, “Highest and Best Use” and “Utility”. Certain of these concepts and principles are partly extracted from the International Valuation Standards.
The 6th Edition of the Malaysian Valuation Standards (MVS 2019) is effective from 1 January 2019 and supersedes all previous editions of the MVS that have been issued by the Board of Valuers, Appraisers, Estate Agents and Property Managers (Board). The MVS also prevails over any prior Circulars issued by the Board in the event there is any conflict between the Circulars and the MVS.
The MVS 2019 Standards:
- MVS 1 “Qualifications of Valuers and Conflicts of Interest”
- MVS 2 “Conditions of Engagement”
- MVS 3 “Purposes of Valuation”
- MVS 4 “Market Value Basis of Valuation”
- MVS 5 “Valuation Bases of Value Other Than Market Value”
- MVS 6 “Inspection and Investigation”
- MVS 7 “Approaches to Valuation”
- MVS 8 “Valuation Reports”
- MVS 9 “Valuations Based on Assumptions”
- MVS 10 “Valuations for Financial Reporting”
- MVS 11 “Valuation of Biological Assets”
- MVS 12 “Valuations for Financing Purposes”
- MVS 13 “Update Valuations”
- MVS 14 “Mass Valuation for Property-Backed Portfolios”
- MVS 15 “Valuation of Plant, Machinery and Equipment”
- MVS 16 “Valuations for Submission to the Director of Insurance and Takaful Supervision, Bank Negara Malaysia”
- MVS 17 “Valuations for Submission to the Securities Commission Malaysia”
- MVS 18 “Valuations for Submission to the Bursa Malaysia Securities Berhad”
- MVS 19 “Limiting Conditions”
Professional Valuation Fees
Below are the Malaysian professional valuation standard fee scale based on the Seventh Schedule (Rule 48) of Valuers, Appraisers and Estate Agents Act 1981.
Fees payable by The Land Administrator under The Land Acquisition Act for Valuation Reports
| From (RM) To (RM) | Fee (RM) |
| 1.00 to 50,000.00 | 1,500.00 |
| 50,001.00 to 500,000.00 | 2,500.00 |
| 500,001.00 to 1,000,000.00 | 3,500.00 |
For awards greater than RM1,000,000 the fee shall be a minimum of RM 3,500 plus the fee based on the following rate:
| From (RM) To (RM) | Fee Rate(%) |
| 1,000,001.00 to 2,000,000.00 | 6/25% |
| 2,000,001.00 to 7,000,000.00 | 5/25% |
| 7,000,001.00 to 15,000,000.00 | 3/20% |
| 15,000,000.00 to 50,000,000.00 | 3/50% |
| More than 50,000,000.00 | 6/250% |
The fees payable to property valuer shall be based on the amount awarded by the District Land Administrator. It shall be payable upon the submission by the person claiming compensation based upon a valuation report prepared by a registered property valuer or appraiser in accordance with the guidelines issued by the Board for the valuation report. It does not include disbursements nor fees/disbursements for work done in preparation for negotiations and court attendance.
Fee for Capital Valuation for submission to Securities Commission, The Central Bank of Malaysia and Plant and Machinery Valuation Services
| 3/8 % on the first RM 100,000 |
| 3/10 % on the residue up to RM 2 million |
| 1/4 % on the residue up to RM 7 million |
| 3/16 % on the residue up to RM 15 million |
| 3/20 % on the residue up to RM 50 million |
| 1/10% on the residue up to RM200 million |
| 1/15% on the residue up to RM500 million |
| 1/20% on the residue over RM500 million |
Minimum Fee : As above, subject to a minimum fee of RM 2,000 per property.
Fee for other Capital Valuation / Rating Valuation Services based on an “Improved Value” Basis
| 1/4 % on the first RM 100,000 |
| 1/5 % on the residue up to RM 2 million |
| 1/6 % on the residue up to RM 7 million |
| 1/8 % on the residue up to RM 15 million |
| 1/10 % on the residue up to RM 50 million |
| 1/15% on the residue up RM200 million |
| 1/20% on the residue up to RM500 million |
| 1/25% on the residue over RM500 million |
Minimum Fee : As above, subject to a minimum fee of RM 400 per property.
Fee for Rental and Rating Valuation Services
| 7 % on the first RM 6,000 of annual rental |
| 4 % on the next RM 12,000 of annual rental |
| 3 % on the next RM 24,000 of annual rental |
| 2.5 % on the next RM 120,000 of annual rental |
| 1.5 % on the next RM 838,000 of annual rental |
| 1 % on the residue over RM 1,000,000 of annual rental |
Minimum Fee : As above, subject to a minimum fee of RM 400 per property.
Fee for Mass Valuation Services for Local Authorities
| RM 45 per holding for the first 30,000 holdings |
| RM 40 per holding for the next 20,000 holdings |
| RM 35 per holding for the balance |
The above fee of property valuer is inclusive of all costs, except for the additional claims for attendance at objection meetings and judicial hearings.
Fees for Update Valuation
For all update valuations carried out under the Malaysian Valuation Standards published by the Board, the fees payable to property valuer shall be at a minimum of 15% of the appropriate scale of fees or RM400 per property, whichever is higher.
Fees for Revaluations
For revaluations carried out under the Malaysian Valuation Standards published by the Board, the fee payable to property valuer shall be a minimum of 30% of the appropriate scale of fees or RM400 per property, whichever is higher.
Fees for Retrospective Valuations
Fees up to ten times the scale fees may be charged by property valuer, depending on negotiations with the client. However, such valuations shall not apply to land acquisition valuations. Such valuations must be retrospective to at least 5 years from the current date.
Additional Claims
In addition to the fees stated above, claims by property valuer may be made for:
- The cost of printing, plans, copies of documents, lithography traveling and other expenses actually incurred;A fee of RM 150 per hour or RM 800 per working day of 8 hours for negotiations, attendance at meetings with solicitors, consultants or authorities;
- A fee of RM 200 per hour or RM 1000 per working day of 8 hours for giving evidence before judicial bodies;
- Additional fees can be charged to the client for additional works done in preparation for negotiations and court attendance.
Note:
- The property valuer fees stated in items (2) and (3) above are chargeable for actual appearance at meetings or before judicial bodies. In the case of postponements, adjournments, etc., (where less than 24 hours notice is given) a minimum fee of RM 400 is chargeable by the property valuer if the meeting or judicial appearance is in the same town/city as the location of the practice and a minimum fee of RM 800 is chargeable if the meeting or judicial appearance is outside the location of the practice.
- The claims and property valuer fees stated in item (1) to (4) above with respect to land acquisition valuations shall not be claimed against the land administrator.
Conclusion
In Malaysia, all the property valuation report shall be based on the 6th Edition of the Malaysian Valuation Standards (MVS 2019). Property valuation process needs to be carried out by authorized firms with registered property valuer and adhere to MVS 2019. If you would like to learn more about the important steps of property valuation process taken by a registered property valuer, please click the button below.