Property Valuation, 3rd Edition

Chapter 1Property Rights and Property Value

1.1 Property rights

Real Property refers to the physical land (including minerals and other natural resources, soil, trees, plants and growing fruits) and improvements to land (including infrastructure, buildings and other facilities). Tenure refers to the relationship, either formal or informal, between members of a society and real property (UN FAO 2002). Tenure determines who can hold and use resources, for how long and under what conditions. These ‘holding and using’ arrangements are referred to as property rights, and the way in which they are formed, recognised and transferred between members of society depends on whether tenure systems are based on written policies and laws or unwritten customs and practices (UN FAO 2012).

For example, an individual may hold or ‘own’ a piece of land in perpetuity, providing the holder with an extensive set of property rights, free of disturbance. This freeholder may decide to lease or rent the land to another person for a period of time. The leaseholder would benefit from use rights (rather than ownership rights), which would end when the lease expires. There can be any number of arrangements, depending on the tenure systems in place. For example, shared equity refers to a combination of leasehold for a term of years but with the ability (usually subject to conditions) to acquire the freehold. This kind of arrangement has been used to enable occupiers of residential dwellings to rent initially ...