A property valuation in Spain — a tasación — is a regulated document, not an agent’s opinion. The rules sit in Orden ECO/805/2003 of 27 March, which develops the line set out by Royal Decree 775/1997 on valuation companies, together with its later amendments. In a market that moves as fast as this one, buyers and sellers both need that legal framework. It is what makes the figure defensible.
The cost method, whether gross or net, can be applied to any type of property, including buildings still at design stage or under construction. Firms such as Klic Arquitectos can carry out a tasación to the standard the regulation sets.
How to value a house: the basics
Start with a distinction that catches out most overseas buyers: valoración and tasación are not the same thing. In short:
- A valoración is only an estimate of market price, with no legal standing. The closest British equivalent is an estate agent’s market appraisal. It looks at certain features of the property without going into detail, though it does take account of Land Registry (Registro de la Propiedad) and cadastral (Catastro) data, which weigh heavily on the price you can realistically ask. Its purpose is to set an approximate figure for the point at which the property goes on the market.
- A tasación does have legal standing and a solid statutory basis. The whole process is governed by very specific rules, contained mainly in the Ministerial Order already mentioned. Only professionals qualified to do so may carry one out, and the final report has to be signed by an architect. This is the document a Spanish bank will lend against.
There are two main methods for establishing how a house is valued: gross replacement value (valor de reemplazamiento bruto, VRB) and net replacement value (valor de reemplazamiento neto, VRN).
First method: gross replacement value (VRB)
Under this method, regulated by Orden ECO/805/2003, three figures are added together: land value, build cost and necessary costs.
- Land value. It can be established by the comparison method or the residual method. For detached houses and industrial units it is expressed in euros per square metre of plot. In every other case it is expressed in euros per square metre of built floor area: commercial premises, the various forms of multi-family housing, and so on.
- Build cost. The cost of the whole construction process through a main contractor. It includes overheads (gastos generales), execution costs and the contractor’s profit (beneficio industrial).
- Necessary costs. Taxes, statutory scale fees (aranceles), licences, public charges and administrative costs — but not the developer’s profit.
This method is used mainly for property under construction, or at design, building or refurbishment stage.
Second method: net replacement value (VRN)
This method applies the following formula:
VRN = (build cost + necessary costs) × (1 – physical depreciation / useful life) + land value – functional depreciation.
The factors that move a valuation most
Finally, the factors that weigh heaviest on the final figure:
- Location. Where the house sits is the first and most influential factor, by some distance.
- Maintenance. The state of the building fabric and the services, and any recent refurbishment, account for a significant share of the figure.
- Energy efficiency. The property must have its energy performance certificate (certificado de eficiencia energética). Ratings run from A to G, with G the least favourable — the same scale British buyers already know from an EPC at home.
One point worth making plainly: a tasación tells a bank what the property is worth. It does not tell you whether the pool is on the deeds or whether the roof leaks. That is a separate piece of work, and a sensible thing to commission before you pay a deposit, not after.
Working out how a house is valued is a job for qualified, authorised professionals, signed off by an architect. There is more on how the Spanish system works in our blog.
