Sebastian Biel
Causes, Types and Evaluation of the Diminished Value of Components as a Result of Construction Defects in Housing
Purpose: The paper aims at indicating the main reasons of construction defects found during the acceptance of multifamily residential buildings and determine the diminished value of a defective component by means of the use value analysis.
Methods:The author has shown the application of the Aurnhammer’s method to determine the diminished value of a component.
Findings: The defects found during the acceptance carried out by inspectors and by apartment buyers are very similar – mainly absence of right angles between walls, scratched window panes and window sills and uneven and scratched walls. Based on Aurnhammer’s method, it was estimated that the value of window joinery has diminished by 7.6% and the value of screed has diminished by 15.6%. The evaluation of diminished value can be done using a block diagram. The analysis indicated that the window value has diminished by 8% and internal plasters value has diminished by 13.75%. The limitation of research is the assessment of the real state of the element made visually on a subjective scale and possible errors in the cost calculation that inflate or underestimate the value of the evaluated element.
Research implications: The presented methods may be used during the acceptance of flats - they may assist the supervision inspector in deciding on the acceptance of the flat, as well as the contractor's representative, who during the acceptance of the flat can quickly estimate the diminished value of an element may have the defect detected during the acceptance of the flat.
Keywords: construction defects; Aurnhammer’s method; apartment acceptance; housing; developer
JEL codes: C83, R3
Category of the paper: research article
CITATION (APA): Biel, S. (2019). Causes, Types and Evaluation of the Diminished Value of Components as a Result of Construction Defects in Housing. World of Real Estate Journal, 109(3), 23-38.
DOI: https://doi.org/10.14659/worej.2019.109.02
