Rental method of valuation: In this method, the net rental income is calculated after deducting all outgoings from the gross rent and year's purchase is calculated after adopting the current bank interest. The valuation of a property is worked out by multiplying the net rental income by the year's purchase.

When the rent has been proved and is likely to be maintained for years to come, then the rental method of valuation should be applied to determine the market value of a property. This method is very useful for a property with a new building. The actual rent paid must be proved that the rent is the fair rent otherwise very little reliance can be placed upon it.

Capitalized value = net rent * year's purchase

Net rent = gross rent - outgoings

Valuation: Land and building method definition

In this method of valuation building portions being values separately after allowing depreciation and the land is valued separately and they are added to get the present value of the property.

The present value of the property = value of the building + value of the land + value of the amenities and services.

The procedure of valuation :

Ascertain from the applicant the exact purpose of valuation. From the document available, note down the measurement of the plot and other details. Verify the measurement and the extent at the site. Asses suitable unit rate based upon the prevailing market rate or from the recent comparable sale insatnces of a similar vacant plot with almost similar charactetistics. Arrive at the value of the building by adopting the procedure. The addition of the value of land and building will be the present value of the property. If the aim of valuation is to assess the market value, apply the reduction factor to the value of the land. Add suitable percentage towards any potential value. Deduct any percentage towards negative factors. Analyze any other points depending i=upon the individual merits of the case. give a valuation report in the appropriate format.