1. The use of AVM’s in the Netherlands:
Netherlands Council for Real Estate Assessment
The use of AVM’s in the Netherlands:
How we benefit from the advantages
Baltic Valuation Conference
25 May 2017
Ruud M. Kathmann

2. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
The Netherlands (1)
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3. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
The Netherlands (2)
The Netherlands provinces municipalities polderboards
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4. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
The Netherlands (3)
Some other facts:
17.1 million inhabitants
Area: 41,543 km² (16,040 square miles)
8.7 million residential and non-residential properties
Total value: € 1,650 billion
More than € 10 billion tax revenues based on the assessed value
Total costs for appraisal and assessment: € 150 million
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5. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Property Taxation
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6. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Property taxation in the Netherlands (1)
Different real estate taxes are based on the same valuation
Municipal real estate tax
Real estate tax polderboards
polderboards take care of “dry feet”
State taxes:
Imputed income for owner occupied houses (Income tax)
Landlord tax for rented houses
Limits fiscal depreciation of real estate (Corporation tax)
Inheritance tax
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7. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Property taxation in the Netherlands (2)
Municipal real estate tax:
for residential property:
only owner pays taxes
tax rate (average) 0.2% of value
tax for average house € 500
for non-residential property:
both owner and occupier taxed
tax rate (average) 0.3% %
exemptions:
agricultural land, public roads, churches, nature
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8. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Property taxation in the Netherlands (3)
Waterboards / polderboards
only for owner
only for built property
land is taxed based on area
tax rate (average) 0.05% of value
tax for average house € 125
100% of financial means from taxation
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9. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Property taxation in the Netherlands (4)
Central government:
Income tax (imputed income of house)
0.60% of value is added to your income
tax for average house € 700
Landlord tax (owner rent out >10 houses)
0.536% of value
tax for average house € 1000
Corporation tax
depreciation can be deducted from profit
but no deduction beyond 100% or 50% of value
Inheritance tax
for houses the assessed value is used
rates from 10% (children etc.) to 40 %
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10. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Property taxation in the Netherlands (1)
Average Tax Bill
Value
Tax
Tax rate
Tax bill
€ 250,000
Municipal real estate tax
0.2%
€ 500
Real estate tax Polderboard
0.05%
€ 125
Income tax (imputed income owner-occupied house)
0.60%*0.42%
€ 630
Total tax bill
€ 1,255
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11. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
About The Netherlands Council for Real Estate Assessment (in Dutch: Waarderingskamer)
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12. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
The Netherlands Council for Real Estate Assessment
Main task: quality control of mass valuation
Involved parties
municipalities (388)
polderboards (23)
national revenue office
Council board has 11 members
Staff 20 persons
Minister of Finance is responsible
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13. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
The Netherlands Council for Real Estate Assessment
Set out guidelines
administration
valuation
quality control procedures
Perform audits
Publish results
Advisor to the Minister of Finance
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14. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Valuation for governmental use in the Netherlands
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15. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Valuation in The Netherlands (1)
International Valuation Standards (EVS/IVS)
Market value
The estimated amount for which a property should exchange on the date of valuation between and willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeable, prudently, and without compulsion
Mass appraisal
IAAO standards
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16. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Valuation in The Netherlands (2)
8.6 million properties valued annually
Done by municipality
re-assessment: once every four year now annually
or by shared service centres or private firms
Computer assisted mass appraisal (CAMA)
different types of models
availability of market data
type of property and comparability of property
to estimate market value and make value report
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17. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Valuation in The Netherlands (3)
Residential property
Market Value based on comparable sales
Different models are used, generally:
(statistical) clusters
calculating models (sometimes using MRA)
All models distinguish at least:
Building itself
Plot
Annexes and outbuildings
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18. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Valuation in The Netherlands (4)
Non-residential property:
Offices, retail and other commercial real estate:
market value based on the comparison of rental prices and capitalisation factor (gross yield)
or market value based on DCF method
Schools, hospitals, railway stations, etc.:
market value
or, when higher, reproduction costs (ground + building)
reproduction cost corrected for technical and functional obsolescence
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19. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Benefits of computer assisted mass appraisal (1)
Cost efficiency: Annually 8.6 million valuations are performed
At a total cost of €150,000,000.- (€17,- for each property)
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20. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Benefits of computer assisted mass appraisal (2)
Due to an increase in quality, the value is more and more accepted (annually 1-3% appeals)
Starting as a pure “tax” value, the assessed value is nowadays used much more broadly:
Income- and inheritance tax
Fraud control
Maximum allowed rent
Mortgage lending (90% LTV)
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21. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Benefits of computer assisted mass appraisal (3)
Equitability:
Similar properties are valued equally
Differences in characteristics are taken into account
Transparancy:
Can be less of a ‘black box’ than the valuers mind
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22. Baltic Valuation Conference
Netherlands Council for Real Estate Assessment
Conclusion
Without AVM’s the annual assessment of all properties would not be possible
The results of the AVM’s are well accepted by taxpayers and other stakeholders
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