Depreciation

A loss of value caused by deterioration, or obsolescence, or both. Deterioration is evidenced by wear and tear and decay. Obsolescence is divisible into two parts; functional and economic. Functional obsolescence may be due to: poor planning, functional inadequacy or over-adequacy due to size, style, age or otherwise. It is evidenced by conditions within the property. Economic obsolescence is caused by changes external to the property such as property use (change in occupier habits or social).