Improved transparency of Real estate transactions

in Slovenia

Marjan Čeh

Developing RE market – all types of transactions in Slovenia, Ljubljana 2005

Improved transparency of real estate market in Slovenia

Establishment of common transparent

computerized RE transactions database

at Surveying and mapping authority of Republic of Slovenia

• Act on real estate agency; (Ur. list 42/03 ZNPosr).

• Directive - Real estate agencies transactions data management and distribution (Ur. list 93/04)

Internet version of RE transactions database

RE Transaction Types in SI

• Sale; on free market• Sale; at public auction• Sale; among persons from all possible

inheritance relation• Sale; due to expropriation• Exchange• Lease• Rent; market rental price (square meter/

month)• Rent; no market (nonprofit) netto rent price (per

square meter, per month)• building right

Real estate object types in RE DB

• Land• Land with object

• Object types:

Building

Part of building

Engineering object

Contract price records in SI• Internal – agency transaction number (index of the job within

the current year)

• Date of contract, time span of job (in days) from beginning of advertisement to contract date

• Netto amount (free of taxes, provisions to agency, operating costs)

• Calculated normalized price “per square meter”, from available price and area data.

• The prices must be recorded separately (price of land, building, part of a building), if the contract indicates them separately.

Subject data: Seller/s and buyer/s

• Nationality of each parity in contract

• No name and address

Definition of prototype – criteria from

WG 3 Economy meeting in Ljubljana, SI • Prototype object: Parcel of vacant,urban land, • In the city size of national average (number of

citizens in comparable town (settlement) is 25 000 - 50 000,

• plot size 400- 2000 m2• In zone planned for detached housing, • No infrastructure on the plot yet but,

– it is possible to connect on the basic utilites (sewage, water, electircity, roads)

Prototype rights

• Existing rights: – ownerhip right– building right

• No obligations – no existing mortgages, servitudes, – no derived (future) mortgages, servitudes.

• All legal aspects of the property are correct (no disputes) - the contract is complete relative to the reality

Prototype subjects

• Buyer and seler – individuals, – both citizens of case state (not foreigner)– not companies– not in RE buissines

• Selers aim:– Sell a Parcel of land in Urban area

• Buyers aim:– Buy a Parcel of land in Urban area,

Prototype economic conditions

• Assume retional behaivour of parities: thay will register the property in LR.

• It is assumed that parities will not hire a valuer to determine the purchase price.

• Payment method of the purchsase price: cash payment with optional depositon of money to the notary,

• No credit (no mortgage)

• Purchase price (market value) around 20 000 EURO

• Profesionals (Real estate agency or Lawyer) are hired to provide all necessary services and information provision: (collect data about their services costs!)

Transactions analyses process in SI

• DB atributes against prototype attributes

1. Definition of protoype criteria for sample selection

2. Selection of representatives according to prototype criteria in SI

3. Colect additional information about representatives (time of adverting, cost of agent, cost of notary, cost of surveyor, VAT, adminstrative fees)

4. Calculate costs for prototype entity – from representatives data

5. Compare costs of state representatives among participating countries.

Selection of representatives of prototype

• Step 1: Select comparable cites (towns)

• Step 2: Select parcels of urban land,

• Step 3: Select parcels of vacant land

• Step 4: Select plot size 400- 2000 m2

• Step 5: Select total price 19 000-21 000 Euro

Selection of representatives in comparable cities – tabele in SI

Kamnik 26477

Krško 27586

Slovenska Bistrica 29285

Domžale 29902

Velenje 33331

Nova Gorica 35640

Novo mesto 40925

Koper/Capodistria 47539

Celje 48081

population range 25 000 - 50 000

Selection of representatives in comparable cities - map

Number of transactions of vacant urban land (plot size 400- 2000 m2)

Average area and average price/m2 of representatives in comparable cities

Sub class of selected representatives total price 19 000 - 21 000 Euro

KU_CODE CADAST_MUN CITY AREA TOTAL_PRIC TOT_EURO SIT_M2 EURO_M2

1448 PREČNA NOVO MESTO 648 4.560.000 19.000 7.037 29

965 LAZE VELENJE 781 4.677.014 19.488 5.988 25

1958 BREZOVICA DOMŽALE 944 4.720.000 19.667 5.000 21

2618 MOVRAŠ KOPER 378 4.754.621 19.811 12.578 52

2618 MOVRAŠ KOPER 400 4.800.000 20.000 12.000 50

1897 NEVLJE KAMNIK 599 4.824.000 20.100 8.053 34

1076 MEDLOG CELJE 1000 4.829.566 20.123 4.830 20

2590 HRIBI KOPER 664 4.910.400 20.460 7.395 31

2663 MRAVLJEVI NOVA GORICA 40 5.000.000 20.833 125.000 521

2608 ŠMARJE KOPER 128 5.000.000 20.833 39.063 163

2653 PŠATA DOMŽALE 414 5.000.000 20.833 12.077 50

1486 STOPIČE NOVO MESTO 580 5.000.000 20.833 8.621 36

1894 GODIČ KAMNIK 700 5.000.000 20.833 7.143 30

1501 VINJA VAS NOVO MESTO 755 5.000.000 20.833 6.623 28

2293 GRGAR NOVA GORICA 772 5.000.000 20.833 6.477 27

2612 SVETI ANTON KOPER 789 5.000.000 20.833 6.337 26

1482 RAGOVO NOVO MESTO 917 5.000.000 20.833 5.453 23

1068 ŠMARTNO CELJE 1007 5.000.000 20.833 4.965 21

2595 ŠKOFIJE KOPER 1328 5.000.000 20.833 3.765 16

1909 ŠMARCA KAMNIK 5263 5.019.135 20.913 954 4

1447GORENJA STRAŽA NOVO MESTO 595 5.024.835 20.937 8.445 35

Distribution of representatives of prototype

TOTAL PRICE FOR SELECTED REPRESENTATIVES

18.500

19.000

19.500

20.000

20.500

21.000

21.500

0 500 1000 1500

AREA (M2)

PR

ICE

(E

UR

O)

TOT_EURO

Closest match,representative of prototype

KM_CODE CADAST_MUN_NAME CITY AREA TOTAL_PRIC TOT_EURO SIT_M2 EURO_M2

2618 MOVRAŠ KOPER 400 4.800.000 20.000 12.000 50

Conclussion

• Refine the prototipe criteria:– Set the radius from the capital city

• Next steps: Colect additional information about representatives

(time of adverting, cost of agent, cost of notary, cost of surveyor , VAT, adminstrative fees)

Calculate costs for prototype entity – from representatives data

Compare costs of state representatives among participating countries.