Finances and Buying Property
Make sure you understand the costs involved in buying a house or apartment and how to go about arranging finance...
There are a number of costs involved in the property purchase process:
- Valuation (taxierapport): Around 0.2% of the purchase price (plus BTW (Value-Added Tax)). The rate is negotiable and the cost may be tax deductible depending on circumstances
- Pre-sale Agreement (koopovereenkomst): Around 0.3% (plus BTW) of the purchase price. Not normally negotiable
- Transfer Contract (akte van levering): Around 0.3% (plus BTW) of the purchase price. Not normally negotiable
- Mortgage Contract (hypotheekakte): 0.15% (plus BTW) of the purchase price. Tax deductible in some circumstances
- Mortgage arranging cost (afsluitprovisie): 1% of the mortgage amount. Tax deductible in some circumstances
- Transfer Tax (overdrachtsbelasting): 2% of the purchase price. Not negotiable
- Estate Agent's Fee (makelaarscourtage): 1.5% of the purchase price (plus BTW). Definitely negotiable, but only payable if you have asked the agent to find a property for you
Each year local authorities will also levy Property Tax based on the market value or square footage of the property. The tax has two parts: the occupant's part and the owner's part. Owner-occupiers pay both parts
If a property is not sold when leaving the Netherlands (for example it is rented out), tax deductions normally disappear.
Be aware that the cost of buying property is about eight percent of the purchase price.
Banks and other institutions are often wary of lending money to non-Dutch nationals. However, in principle it is possible to raise up to five times gross salary (but often the offer will be less, possibly three and a half or four times salary) as long as various conditions are met. The second income in a family can be taken into account when deciding how much a bank is willing to lend. The maximum term for a mortgage is 30 years.
To successfully apply for a mortgage the buyer must:
- Have lived in the Netherlands for at least five years
- Be in permanent employment
- Have a valid residency permit
Self-employed applicants will need to produce a minimum of three years' accounts. These must have been prepared by a recognised accountant and show earnings for the period as well as predictions for the forthcoming year.
Some lenders are happy to flex these rules allowing a shorter period of residency, for example, or accepting someone with a short-term contract.
A range of mortgage products are on offer and they require careful consideration. Tax consequences will differ depending on the type of mortgage and on personal circumstances.
Dutch nationals can deduct interest payments from their income tax for up to 30 years and therefore typically borrow as much as they can and repay little if any of the capital. Non-Dutch nationals may or may not benefit from the same situation depending on their circumstances.
Interest rates are currently quite low. Both interest-only mortgages (aflossingvrij) and endowment mortgages (spaarhypotheek) are common.
Lenders will ask for a valuation report (taxatierapport) for the property in question (paid for by the applicant). A recognised valuer (taxateur) must produce this and this must not be the agent handling the sale.
The valuation is not a survey. No furniture is moved and no floorboards are lifted. If there are doubts about the property then a separate survey should be undertaken. The purchaser is expected to meet this cost also.