Good news for entrepreneurs, SMEs and farmers in the earthquake area: from Tuesday they can receive compensation for the decrease in value of their business premises. The compensation varies, but in most cases it amounts to several thousand euros.
The aptly chosen name ‘decrease in value of non-residential properties’ concerns commercial properties, i.e. properties that owners do not use as homes. You can think of an office building, shop or farm, but also, for example, a car wash or supermarket.
The depreciation scheme was created to compensate for the loss of value of properties within the earthquake area. For example, the property may become less valuable or increase in value less rapidly than a comparable property in another area in the Netherlands. The scheme applies to all entrepreneurs and farmers who owned business premises on August 16, 2012, the day of the earthquake near Huizinge.
Tens of millions
In total, the IMG expects around ten thousand applications for the new depreciation scheme. “We assume tens of millions of euros in damages,” says general manager Olivier de Bruijne. “That varies from a few hundred euros to tens of thousands of euros, depending on the value of a property and the associated depreciation.”
As early as September 2020, homeowners could receive compensation for their house that had become less valuable. There are a few reasons why entrepreneurs had to wait years longer for a comparable arrangement. For example, unlike the housing scheme, the IMG could not rely on the methodology developed at the time by research agency Atlas Research.
‘Emotion plays more of a role’
“Unlike with homes, we couldn’t really do good comparative research because there are far fewer commercial properties sold in the area. We couldn’t just copy the methodology,” says De Bruijne. Secondly, the effect of earthquakes on depreciation is different for commercial properties than for residential properties. “The housing market is more sensitive to this. Emotion plays more of a role.”
A specially established committee of the IMG investigated the degree of decline in value of commercial properties and has now come up with a new calculation model. From Tuesday, entrepreneurs from Eemsdelta, the hardest-hit municipality, can apply for the scheme. This is followed step by step by business owners in Het Hogeland, Midden-Groningen, Groningen and the other municipalities.
The area in which business objects are eligible is the same as the area that the IMG uses for the depreciation of homes scheme. The damage counter uses eight severity categories. The amount of the compensation depends on this. For example, a property in the center of the area will be reimbursed more than a property on the edge (see box).
Government properties do not fall under the scheme because they are not traded on the market. Agricultural land is also not included. The IMG concluded that this type of land is not sensitive to a decline in value. “We have already informed the agricultural sector about this.”
Varying fees
Due to both the WOZ value and the location of a business premises, the compensation can vary greatly per entrepreneur. Take a hypothetical baker from Delfzijl who lives above his shop, with a WOZ value of 620,000 for his entire building and 370,000 euros for the bakery. It falls into severity category 4 and has a depreciation percentage of 4.3 percent due to the WOZ value. That amounts to almost 17,000 euros in compensation.
But a small entrepreneur from Appingedam, for example, with a WOZ value of 250,000 euros gets a little more. It falls within severity category 8 and a depreciation percentage of 10.5 percent applies. In this case, this amounts to a compensation of 29,000 euros.
According to the IMG calculation model, entrepreneurs or farmers with smaller premises are in most cases paid out slightly more than owners of larger business premises, such as supermarkets and large stores. “The more professional and larger a company, the less loss of value weighs on the entrepreneur,” says De Bruijne.
Tags: IMG offers compensation depreciation business properties assume tens millions euros
