Rating Valuation Model for Residential Properties in Sri Lanka: Case Study in Homagama

Abstract

Similar to the most countries, the property tax is the main source of income in local government authorities in Sri Lanka. Property taxes include a variety of taxes on land, building & other immovable property. Rating is one form of property taxes and it is the major property tax in Sri Lanka. The current practice of rating levying in the country is on the basis of Annual Value of the property. However, in some developed countries such as United Kingdom, it is calculated on the basis of the capital value. Hence, the aim of this research is searching for an alternative approach for rating valuation based on the capital value of the property. Data collection was mainly done with the help of Rating Cards maintained by the Government Valuation Department of Sri Lanka. Results indicate that six main factors significantly influence in calculating the capital value. Hence, the final model, which is based on both land and building values was calculated according to the six factors that were significant in the analysis.