Past Forward: Tracing the Property Tax Through Time and Place

The Lincoln Institute provides a variety of early- and mid-career fellowship opportunities for researchers. In this series, we follow up with our fellows to learn more about their work.

Luc Hermans is scheduled to finish his PhD in real estate valuation at Northern Ireland’s Ulster University next year, but has lately found himself writing research papers, articles, and book chapters—everything but the dissertation itself, he jokes. “I hope I am in the final stages of finishing, but you never know until you’re there,” he says.

Some of that writing has been for the Lincoln Institute: In his role as a chief global officer/data scientist at Waarderingskamer, the Netherlands Council for Real Estate Assessment, Hermans and his colleagues coauthored a 2024 Lincoln Institute collection called Lessons from the Netherlands and then contributed to the new book Property Tax in Europe: A Changing Landscape.

“We wrote the chapter on the Netherlands, and we also wrote the addendum chapter on technical development and the future of property evaluation,” Hermans says. The organization partnered with the Lincoln Institute to host a conference in June in the Netherlands, marking the book’s release. “We figured that publishing a landmark book like this—it’s almost a thousand pages—should have some sort of celebration.”

Hermans’ connection to the institute began in 2023, when he was awarded a C. Lowell Harriss Dissertation Fellowship. Named for a longtime Lincoln Institute of Land Policy board member and Columbia University economics professor, the fellowship assists PhD students whose research complements the institute’s interests in land and tax policy.

In this conversation, which has been edited for length and clarity, Hermans discusses the origins of the property tax, how tax exemptions shape our built environment, and why so many Londoners consider themselves snail farmers.

JON GOREY: What is the general focus of your research?

LUC HERMANS: When I started my dissertation, there was a lot of discussion about which automated valuation model for property tax is the best one. We use a lot of statistical models, whether they’re based on AI, or geographical statistical models, or even just your normal linear models. They all work quite well, and the academic debate was just going in circles trying to find the best one.

And my take on that whole debate is basically: If they all work well, we have to find a way to include all of them instead of finding which one is the best. So I’ve started to look at how to combine two models, how you could use a second model to give a validation of some sort on your property valuation, and then that evolved into combining multiple models.

JG: What are some ways property tax systems or assessment methods differ between the Netherlands, Europe more broadly, and North America?

LH: It’s wildly different across Europe. There are a lot of historical values; some of the countries, they valued, for instance, in the ’70s or in the ’90s, and they still use that as the base. Whereas the Netherlands and a lot of states in the US do either cyclical or annual valuations, so it will go every year or maybe every three years. The Dutch system is more towards what an American system would look like. But then if you even cross the border to Belgium, that’s a very vague system where they don’t really revalue their houses. That’s the main thing of the book—every chapter, every country, is hugely different.

Of course, there are some similarities between countries that have shared a history—for instance, the Czech Republic and Slovakia. The post-Soviet countries share the same background. The more Western European countries, like France and the Netherlands, we had that cadastral system that was introduced by the French Revolution—Napoleon brought that with him—which is still very influential in the way we sort our property tax and the way we register land. A lot of the history of the continent is also involved in how those country-specific things work out.

JG: Can you give an example of a tax policy that’s rooted in a country’s unique geographical, historical, or cultural context?

LH: I can give an example from the Netherlands that I think is quite specific—I don’t think another country has it. Most of the country is either at or below or just above sea level. The fens works, the dikes and everything, they are not always on community grounds. Sometimes they’re in people’s backyards or they’re part of their parcels. If the polder boards, as we call them—the organizations that are tasked with keeping our feet dry—if they have to do fens work on that part of your parcel, you don’t have to pay any property tax on that land.

JG: Have you encountered anything surprising or counterintuitive in your research?

LH: It’s always surprising to see how people use exemptions. I’ve seen people argue that they had a church at home or a religious group, which were very questionable. There’s a surprising amount of snail farms in London city center, because a snail farm can just be a shoebox filled with leaves and snails, but that could still fall under an agricultural relief.

In Amsterdam, you can see all the very narrow entrances to the houses—that’s not because we like to build that way. It’s because our property tax was once based on the frontage of a house—so the wider the building was, the more tax you had to pay. So a lot of the houses, they have a very small entrance and then they spread out once you’re inside. And I find it very interesting because even when that ruling was in place, the people who had the money wanted to show off that they had it, so they started building very wide houses. As you get to the inner canals, you see very wide buildings where people were basically showing off. And on the other end, you find very small entrances where people were not really dodging taxes, but minimizing what they had to pay.

And the same goes for a later period, where they would calculate your property tax based on the number of windows that you had. But then people would just brick up their windows—you’d still see the outline of a window, but filled with bricks—so it wouldn’t count anymore toward their property tax. You can still find that in the current-day buildings. We think an exemption is just impacting the property tax, but it’s also almost always very impactful to our built environment.

JG: Is climate risk becoming more of a factor in market or assessed values?

LH: I’ll just start with a US example: Insuring a house in Florida, right on the coast, nobody can pay for that anymore. Which becomes a self-sorting thing: we don’t build on the coasts because it’s economically unviable, and then people will get out of the risk zone based on financial grounds.

But in the Netherlands, I think people do it unconsciously. It’s not at the forefront of thinking— there’s a housing shortage, so people get what they can get.
But nobody’s favoring the south facing garden anymore, especially during these summer months, because the sun exposure will just heat up the house too much. Whereas flood risk, I’d say people think about it, but as one of the last things. I would say most of our people live in the cities, so a phenomenon like the urban heat island effect is far more prominent and far more deadly at this point.

JG: What’s one thing you wish more people understood about the property tax or the way properties are assessed?

LH: The best kind of taxing is when people know what they pay for. It’s obviously hard to say, well, this euro or dollar that you’ve paid goes to the playground just across the street or something like that. We wish we could, but we can’t. But if people understand that the property tax brings money to the community, and then we make our community better to live in or more enjoyable to live in, they might actually be happy to pay their local tax. With federal taxes, it can feel like everything flows so far away, and gets spent on things that are even further away. But local taxes and municipal taxes, they solve your local problems.

And that will get increasingly important with climate change, because while global warming is very much a global problem, the way it plays out is very local. The heat island effect, that’s very local. We will see bigger natural disasters, that’s just a given at this point. And if people would realize that paying for property taxes can, if spent well, also help mitigate the impact of these risks, we might actually want to pay a little bit more to get things in place to mitigate all that
so that our children are safe, our houses are safe. That’s the main thing about property taxes:
It’s basically a tool for helping us solve community problems.

JG: What’s a great book you’ve read lately, or a TV show you’ve enjoyed streaming?

LH: One of my all-time favorites is a book by two Polish academics, and it’s going to sound very nerdy, and in a way, it is. It’s called Modeling Reality, and it’s basically about how we look at phenomena that are around us and see how those play out once we make it down to a model …. It’s also just good to watch or to find something a bit more laid back every now and again.
I’m a big sports watcher, so I watched basically every game of the World Cup, and I watch a lot of cycling. I would encourage people to … try other sports every now and again. So if you’re big into [American] football, try to watch soccer, or maybe the other way around, or if you’re big into hockey, maybe you can watch a game of field hockey every now and again. It’s good fun.

Jon Gorey is a staff writer at the Lincoln Institute of Land Policy.

Lead image: Luc Hermans, chief global officer/data scientist at Waarderingskamer, the Netherlands Council for Real Estate Assessment. Credit: Courtesy photo.