APTI Summary Brief Summary Brief Number 10

Valuation for Property Tax

Purposes
Nyah Zebong, Paul Fish and Wilson Prichard

Introduction Answers to these questions may vary across

countries. There is, however, growing agreement
Improving processes for valuing properties
that the central need in most countries is
lies at the heart of efforts to improve the
to simplify existing valuation processes,
overall effectiveness of property taxation.
to better align them with the realities of
Effective property taxation is impossible
undeveloped local property markets and
without efficient property valuation. In
constrained administrative capacity.
practice, however, valuation rolls across most
of Africa are incomplete and severely out-of- Challenges to ensuring
date, thus dramatically reducing potential effective valuation in
property tax yield. This is, at least in part,
Africa
a function of history: many of the valuation
Discussions of property valuation frequently
models being used on the continent do not
begin from idealised models of property
reflect best practices and local learning, but
taxation. It is more fruitful, however, to
are inherited vestiges of colonial systems that
begin from an understanding of the unique
no longer respond adequately to local needs.
challenges of effective valuation in Africa.
The need to modernise is urgent, but This can point towards valuation models
progress has been slow. Effective reform that are better able to respond to the

needs to consider two broad questions: continent’s needs.

(i) the extent to which market value or Conceptualising and measuring value: in most
physical attributes of the property should be African contexts property markets are both
the basis for valuation; and (ii) which organ underdeveloped and opaque, particularly
of government should be responsible for outside of capital cities. This presents challenges
valuation, and how should it be organised? that are both practical and conceptual.

African Property Tax Initiative (APTI) – supporting robust, policy-relevant

research to boost wider use of more effective property tax systems in Africa

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APTI Summary Brief Valuation for Property Tax Purposes

Where property markets are underdeveloped there

is little sales data upon which to base valuations. many African countries
As a result, it is far more difficult to assign accurate
inherited complex
property valuations, there is greater scope for
abuse, and these valuations are more likely to institutional structures for
be contested. In peri-urban or rural areas where property tax administration,
property markets are almost non-existent, the
which have posed a
idea of a market value may be largely theoretical.
There may be no realistic possibility of selling further barrier to effective
the property owing, for example, to the absence implementation.
of demand, contested or unclear land titles, or
communal land holdings. This may generate sharp
1. Many countries have separate agencies
disagreements about appropriate valuation for tax
responsible for land titling and land valuation
purposes and, in some cases, large discrepancies
that do not share data effectively, thus
between the notional value of a property and
complicating valuation efforts.
taxpayers’ actual ability to pay.
2. In other areas changes to complex existing
Land titling and questions of ownership: effective valuation methods have been blocked by
property taxation generally requires clarity about central valuation departments wedded
property ownership. But this is ambiguous in to existing practices, or by government
many countries where land titling is incomplete, authorities that have insisted on a narrow
highly contested or held by communities. interpretation of existing laws (often with roots
In urban areas this often reflects multiple competing in the colonial period).
ownership claims – or the simple absence of 3. In still other areas efforts to expand
ownership in more informal settlements. In areas of valuation capacity at the subnational level
communal land ownership this allows for long-term have sometimes been blocked by central
occupation of the land, but not formal ownership. government ministries or valuation departments
In both cases, taxing the effective occupant of interested in preserving the status quo.
the land is one possible alternative to attempting
to tax ownership. However, this raises its own Valuation models
issues: taxing occupation rather than ownership These challenges to property valuation in Africa
eliminates the possible role of the property tax as have complicated the applicability of models
a tax on wealth, and potentially disadvantages of property taxation inherited from colonial
(generally less wealthy) renters. authorities, and have generated growing interest
in alternative models.
Institutional complexity and capacity constraints:
many African countries inherited complex Market value-based systems are dominant in
institutional structures for property tax the former colonial capitals, and in much of
administration, which have posed a further Africa. They seek to estimate the price a willing
barrier to effective implementation. Three issues and informed buyer would pay to a willing
appear to be relatively common: and informed seller for a given property, or,

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Valuation for Property Tax Purposes

alternatively, have attempted to estimate the • They are generally somewhat equitable, based
potential rental value of the property. on the size of land or properties.

The principal advantages of such systems are: These approaches have, however, revealed two
principal disadvantages:
• They are often designed to place the highest
burden of property tax on the most valuable • They fail to adequately incorporate qualitative
properties. aspects of buildings, which significantly limits
• Typically, property markets dictate which fairness. This is a special concern outside large
properties are most valuable. cities, where older and unimproved homes are
• Where property markets are active, property often large in surface area or sit on large plots.
valuations – and property tax revenue – should • Administrative authorities are responsible
increase as market prices increase. for adjusting valuations upwards over time
However, market value-based systems have to ensure revenue buoyancy. These annual
frequently proven problematic in Africa: adjustments may be politically difficult.

• In most African cities markets are poorly While market value- and surface area-based
developed and comparable transactions are valuations remain dominant in Africa,
hard to find or simply unavailable. governments are increasingly considering
• Even where market transactions occur, the simplified hybrid methods designed to be both
declared prices are often understated to avoid equitable and practically feasible. These hybrids
other forms of estate taxes. begin from a surface area-based approach, but
• Many countries experience a severe shortage add locational and qualitative factors (class,
of qualified assessors to handle the number zones and construction).
and frequency of valuations needed.
Hybrid methods used in some countries are
• In the absence of active property markets,
designed to generate presumptive market
valuations are likely to be open to collusion or
values. In Cameroon, for example, the property’s
corruption between assessors and property
presumptive value is obtained by multiplying
owners.
the surface area by clear reference prices
• Valuations are more likely to be contested
provided for in regulation (classified according
and appealed by taxpayers who have little
to municipality, zones therein and attributes
transparent basis for assessing their fairness.
of the property). This may not perfectly reflect
Surface area-based approaches that use the area market values, but values should be generally
of land or buildings to assess the property tax progressive – while providing a predictable and
base have, historically, been the main alternative. common point of reference for all stakeholders.
Their principal advantages have been that:
A points-based system has been adopted at the
• They have a highly transparent and easy-to- local level in countries like Sierra Leone and
verify taxable base. Malawi. This method assigns points based on
• The property’s taxable base can be easily the surface area of the land and buildings, while
updated using a standard formula. additional points are awarded for positive features

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APTI Summary Brief Valuation for Property Tax Purposes

or deducted for negative features of the property complex market value-based systems.
(e.g. neighbourhood, construction materials, • It may reduce the risk of collusion with local
access to services and quality of finishing). Its key property owners.
difference and advantage, relative to presumptive
The principal disadvantages are threefold:
market values, is that instead of relying on
reference regulatory prices, the method correlates • Actual assessment of properties is
geographically removed from municipal
to market value as a reasonability test.
authorities, resulting in relatively high costs to:
For all the methods above there is a question (a) update and maintain the tax register,
of whether valuation should be of land, (b) accept and deal with tax appeals, (c) issue
buildings or both, and whether it should cover only and deliver rate demand notices in a timely
de jure (titled) or also de facto (untitled) ownership manner, and (d) challenge defaulters to comply.
of property. In some cases governments may • Central valuation officers may have weak
require separate valuations of land and buildings, incentives overall. Given that property taxes
and may tax only titled property. Here, however, are a tiny share of central revenue, the lack of
experience seems clear: a single valuation that accountability to local authorities may reduce
incorporates both land and buildings, and covers pressure for adequate valuation.
all forms of ownership, is likely to be most • Countries reliant on property valuation
administratively acceptable. by central government authorities almost
universally appear to have a severe shortage
Centralised or of trained staff relative to the number of
decentralised?1 properties to be valued.

Africa’s systems equally vary in the extent to The alternative decentralised model is typically
which valuation is centralised or decentralised. found in anglophone Africa, where the English
In practice centralisation appears to remain the colonial system treated property taxes as the
dominant model, particularly in francophone responsibility of subnational governments. Its
countries, though some anglophone countries principal advantages are that:
have assessments decentralised to municipalities. • It is pragmatic and cost-effective compared to

Centralised valuation is typically operationalised the centralised model.

by the creation of a central valuation agency, or in • Localisation is consistent with objectives of

some cases is simply left to the tax administration. building local governance capacity, and can
facilitate appeals and transparency.
The principal advantages of centralised • Since communities are closely involved in
management of valuation systems are that: valuation and decision-making, it may secure

• It ensures the use of harmonised methods of legitimacy for subnational government action and

assessing properties throughout a country. may contribute to increased property tax yields.

Greater technical capacity can be accessed for The principal disadvantages are threefold:

1
Goodfellow, T. (2017) Central-Local Government Roles and Relationships in Property Taxation, ICTD Summary Brief 12,
Brighton: IDS.

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Valuation for Property Tax Purposes

• The concentration of administrative

components at the local level could facilitate The right answer is
collusion and rent-seeking.
likely to depend on the
• Lack of capacity at the local level for more
complex valuation methods/processes is
details of local context,
a concern – though it may be significantly while hybrid methods are
reduced with simpler methods.
possible. The most urgent
• There may be a lack of consistency in
property valuations across different local
need is for careful
government areas. consideration of relevant
The right answer is likely to depend on the trade-offs where reform is
details of local context, while hybrid methods
being contemplated.
are possible. The most urgent need is for careful
consideration of relevant trade-offs where reform
many francophone countries, and where local
is being contemplated.
governments control property taxation.
Valuation officers, tax a. Tax authorities are likely to have clearer
authorities, private contractors incentives for ensuring that valuation is up to

and self-assessment date in order to maximise revenue collection.

b. However, close links between valuation
Irrespective of which level of government is
and revenue collection may risk greater
responsible, African countries equally vary in the
corruption and abuse.
specific actors who carry out valuation efforts.
There are four primary alternatives: 3. Private contractors: where valuation by
government officers has proven ineffective
1. Valuation officers: particularly in anglophone
over time, some local governments have
countries, it is common to have distinct
begun to turn to private contractors.
valuation departments assess property
a. This may be an effective short-term
values, and then pass these to tax agencies
strategy: clear contracts and the
for billing and collection.
enforcement thereof can generate effective
a. This model has the advantage of
incentives for expanded valuation efforts.
separating valuation from tax collection,
b. In the long term, reliance on private
potentially ensuring consistency and
contracts can pose substantial risks,
reducing scope for coercion and abuse.
including: (i) reducing the scope for public
b. However, without the need to collect
appeals, (ii) contracting problems that
revenue, these officers may have insufficient
increase cost or reduce effectiveness,
incentives to ensure that property valuations
owing to either corruption or simple errors,
are complete and up-to-date.
(iii) a failure to develop long-term capacity
2. Tax authorities: an alternative is for valuation and ownership within local governments,
of properties to be carried out by tax agencies and (iv) weakening links of accountability
themselves. This appears to be the case in between governments and citizens.

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APTI Summary Brief Valuation for Property Tax Purposes

4. Self-assessment: finally, Rwanda has been

the most notable adopter of a model of In these situations,
self-assessment, in which property owners are
progressive medium-term
required to declare property values, surface
area or key characteristics for automated
steps could be taken
valuation to the tax authorities. towards instituting
a. Self-assessment can dramatically reduce
valuation arrangements
time, costs and the logistical challenges of
current valuation systems.
that are more effective
b. However, meaningful self-assessment and better accommodate
depends on an effective (and equitably
local realities.
applied) audit of declared values and
publicised enforcement of those who report
accumulated expertise of central agencies
false data, potentially achievable through
with the practical benefits of simplification,
simplified valuation criteria to use as a
while exploring diverse modes of collaboration
reasonability test. In many contexts such
between central and local authorities.3
effective audit does not yet appear to exist.
In these situations, progressive medium-term
The way forward steps could be taken towards instituting valuation
Recent experience in several countries highlights arrangements that are more effective and better
the advantages of simplified valuation systems, accommodate local realities. The following
along with some possible benefits of local objectives could be helpful guides in selecting
administration. Successful cases have proven to the right combination of method(s) and model(s)
be low cost and responsive to local needs, while – though the right answer in any given country
providing hands-on training to local valuation will reflect local circumstances.
officers. Effective IT systems have, in turn, helped
1. Consider simplifying valuation methods in
to manage the risks of local collusion and political
order to reduce costs and increase coverage:
capture.2
a consistent message from recent research
However, while these simplified methods and experience is that market-based valuation
have proven relatively effective, they pose is costly and impractical in most African
a key challenge: in countries where central contexts – and certainly outside larger cities.
governments have historically retained and There is a strong argument for considering the
exercised full authority, it might not be realistic use of presumptive market value- or points-
or practical to envisage a quick and complete based systems – either as a primary form of
reversal of existing systems. Instead, hybrid valuation, or as a means to audit self-assessed
strategies may be possible: combining the values. Even where reliance on market-based

2
Prichard, W. and Fish, P. (2017) Strengthening IT Systems for Property Tax Reform, ICTD Summary Brief 11, Brighton: IDS.
3
Goodfellow, T. (2017) Central-Local Government Roles and Relationships in Property Taxation, ICTD Summary Brief 12,
Brighton: IDS.

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Valuation for Property Tax Purposes

valuation is maintained as a first option, it small changes to legislation may facilitate more
may be possible to use these other models as appropriate methods. Alternatively, flexibility
alternative options available to local authorities in interpreting existing legislation may allow
where market-based valuations are out of authorities to experiment with new approaches
date, non-existent or otherwise problematic. where valuations are out of date.

2. Explore the benefits of localising valuation 4. Exploit the potential of automated valuation
activities – or hybrid arrangements: the tools: new IT tools hold substantial potential
primary drawback of centralised valuation – to facilitate more effective and transparent
particularly outside capital cities – has been valuation.4 This is particularly true when
high costs, large geographic distances and a paired with simplified valuation methods, as
lack of sufficiently trained valuation officers. basic and observable property characteristics
Increased reliance on locally trained officials, can be automatically translated into property
employing simplified valuation methods, has valuations and bills – and/or used to cross-
demonstrated significant potential. This can check the accuracy of existing valuations.
be achieved through full decentralisation 5. Strengthen appeals in order to build credibility
of responsibility to local governments, and compliance: an often-overlooked
but equally through partnerships: the concern is that taxpayers should be able
establishment of local valuation offices under to: (a) appreciate the reasons underpinning
central direction, or locally recruited valuation their valuation, and (b) understand why their
teams supported by central valuation officers. neighbours are assessed higher or lower. This
Where simplified methods are employed can build credibility, particularly if they can
local staff may not be valuation officers as appeal what they feel are invalid valuations.
such, but merely collect key property data. Simplified valuation methods can be very
Central government valuation officers would, helpful as they are based on observable
for example, retain responsibility for valuing characteristics, and are thus more transparent
smaller numbers of properties, in order to and easier to understand.
establish reference prices to translate basic
6. The absolute value of each property is less
property characteristics into taxable values.
important than the relative value: the majority
3. Understand institutional barriers to improved of taxpayers are likely to be most interested
valuation: in many countries there is an in knowing that they are paying as much as
obvious mismatch between the small number a similar houseowner, or less than a larger
of valuation officers and large numbers of or superior house. This is particularly true
properties awaiting valuation. But reform in Africa, where limited property markets,
has been slow. Governments should seek unclear ownership and communal landholding
to understand the barriers to expanded may make it easier to assess relative values
recruitment – and expand flexibility where than actual market values. As such, methods
existing practices are failing. Thus, for example, that can apply consistent and comparable

4
Prichard, W. and Fish, P. (2017) Strengthening IT Systems for Property Tax Reform, ICTD Summary Brief 11, Brighton: IDS.

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APTI Summary Brief Valuation for Property Tax Purposes

valuations within different localities are critical locally acceptable. The features of land
to perceptions of fairness. and property that create perceived value

7. Be sensitive to local conditions, understandings may differ across localities, and valuation
and constraints: even when employing formulas should reflect this. Where property
simplified valuation systems, different markets are almost non-existent, or property
localities may present unique needs. Where is held communally, the basis and rationale
ownership is contested or unclear, alternative for property taxes need to be communicated
strategies for applying the tax – for example, appropriately – and allowance made where
on occupants or landlords – need to be tax rates are inconsistent with ability to pay.

Further reading
Bahl, R. (2009) Property Tax Reform in Developing and Transition Countries, USAID-funded Fiscal Reform and Economic
Governance project, Contract No. GEG- I-06-04-00001-00, USAID
Fish, P. (forthcoming) Property Tax Revenue Mobilisation for Local Government: Training Manual, ICTD Working Paper,
Brighton: IDS
Franzsen, R. and McCluskey, W. (eds) (2017) Property Tax in Africa: Status, Challenges, and Prospects, Cambridge: Lincoln
Institute of Land Policy
Goodfellow, T. (2017) Central-Local Government Roles and Relationships in Property Taxation, ICTD Summary Brief 12,
Brighton: IDS
Kelly, R. (2012) Making the Property Tax Work, International Center for Public Policy Working Paper 13-11
Kelly, R. (2000) ‘Designing a Property Tax Strategy for Sub-Saharan Africa: An Analytical Framework Applied to Kenya’,
Public Budgeting and Finance 20(4): 36-51
Prichard, W. (2017) Linking Property Tax Revenue and Public Services, ICTD Summary Brief 13, Brighton: IDS
Prichard, W. and Fish, P. (2017) Strengthening IT Systems for Property Tax Reform, ICTD Summary Brief 11, Brighton: IDS

Credits
This ICTD Summary Brief was written by Nyah Zebong, Paul Fish and Wilson Prichard. Nyah Zebong is a tax professional
with over twelve years of experience working on complex policy and administrative issues relating to extractives and
international taxation. He recently joined the ICTD’s African Property Tax Initiative (APTI) as Project Leader with increasing
interest in property taxation research. Paul Fish is a Chartered Surveyor, specialising in the property valuation field for
over 35 years. He headed the Canadian practice at Altus Group. He founded a non-governmental organisation, Revenue
Development Foundation, through which he has designed and implemented property taxation reform in various subnational
governments in both Sierra Leone and Malawi. He has also consulted with other reform efforts in Ghana and Ethiopia.
Wilson Prichard is an Associate Professor jointly appointed to the Department of Political Science and the Munk School of
Global Affairs at the University of Toronto. He is a Research Fellow at the Institute of Development Studies at the University
of Sussex, and Research Director of the International Centre for Tax and Development (ICTD). .
The ICTD is funded by UK aid from the UK Government, and by a grant from the Bill & Melinda Gates Foundation; however
the views expressed do not necessarily reflect the UK government’s official policies nor those of the Gates Foundation.
Readers are encouraged to quote and reproduce material from the series. In return, ICTD requests due acknowledgement
and quotes to be properly referenced.
First published by the Institute of Development Studies in October 2017
© Institute of Development Studies, 2017

International Centre for Tax and Development

at the Institute of Development Studies
Brighton BN1 9RE, UK
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