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In the UK real estate, functional obsolescence indicates a kind of deficiency created by a particular design, or a style, or space in a house that is outdated, not aligned with the basic standards or has unnecessary design improvements that lead to the loss of property value.
Such a house is functionally obsolete having too much redundant, or too little of the relevant feature. For example, a new large house surrounded by old smaller ones may not get the expected market value due to unattractive location as it is the factor considered significant while investing in real estate.
Sometimes, such deficiency is curable and the cost of fixing makes sense but in most cases, such houses have certain complications, which cannot be resolved permanently by investing more.
Such terms are used by companies during long term planning in different types of investment products to get the depreciation of assets on the books where the overall goal is to calculate and track the declining usefulness to anticipate the requirement for repurchasing or selling an asset.
In the technology sector, the evolution of smartphones and the change in its design creates functional obsolescence where the old designs are unable to perform certain basic functions.
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