Discounts and abatements in real estate appraisal Morocco
Indivision, dismemberment, third-party occupation, dilapidation, monumental constraints: all create a discount from theoretical market value. Documented ranges and justification principles in the RICS Red Book report.
Discounts and abatements transform theoretical value into actual transaction value. Each must be quantified, justified, and documented.
Indivision discount
When a property is held in indivision, its individual cession value (the quote-part) is lower than the global value pro rata. Causes: reduced liquidity, partition costs, negotiation between indivisaires, procedural risk. Standard family indivision: 10-15%. Conflictual indivision: 20-35%. Indivision on indivisible asset (unique riad, villa): highest discount as forced sale is difficult. Indivision on multi-parcel subdivision: moderate discount, physical partition possible.
Dismemberment discount (usufruct and bare ownership)
Dismemberment separates bare ownership (right to dispose) from usufruct (right to enjoy). The sum of two partial values is always inferior to full property value. Life usufruct — Moroccan indicative tax scale: 70% of full property for usufructuary < 21 years, degressive to 10% for > 80 years. Bare ownership = full property - usufruct. Effective discount on bare ownership transfer: 20-40% by usufructuary age.
Occupation discount
Property occupied by third party (tenant, free occupier, untitled occupier) is worth less than free property. Causes: impossibility of immediate use, duration and cost to recover possession, procedural risk. Commercial lease 3/6/9 tenant in place, rent > ERV: over-rent (over-rented); rent < ERV: under-rent. Term & Reversion analysis. Residential tenant Law 67-12, old frozen rent: 10-25% discount. Untitled occupation: 20-40% discount. Free occupation by family member: 5-15% discount.
Dilapidation and urban discount
For poor-condition assets, discount corresponds to refurbishment cost: Normal use: no specific discount. Degraded finishing: 10-15%. Degraded structure (water infiltration, structural cracks): 25-40%. Ruinous condition: 50-70% or bare land valuation. Listed monument: ambivalent — exceptional preserved assets see positive net effect; costly-to-restore see negative. Heritage protection zone (Marrakech, Fez, Tangier medinas): 5-10% discount on optionality. Master plan reservation: significant discount as expropriation is predictable.
- Factual motive identified (indivision, dismemberment, occupation, etc.)
- Reference to comparable transactions with same profile
- Computed amount or percentage retained
- Alternative scenario sensitivity
- Articulation with full property market value
- Discount applied without justification
- No comparable evidence
- Discount stacked beyond reasonable bounds
- Articulation with full value missing
FAQ
Why is indivision discount so high in conflictual cases?
Because forced sale procedure can extend 2-4 years, judicial costs accumulate, and a buyer of a quote-part inherits the conflict. Liquidity premium demanded by serious buyers is 20-35% under such conditions.
Are bare ownership discounts the same in France and Morocco?
Similar principle but different scales. French tax scale is more precise; Moroccan practice references it but applies case-by-case judgement on family context and asset type. Effective bare ownership discount: 20-40% in both jurisdictions for life usufruct.
Related reading
- Discounts France vs Morocco — indivision, usufruct
- Exiting real estate joint ownership Morocco
- IVS 104 Market Value — definition
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