Buying a Property in the Netherlands

Home ownership among the Dutch was relatively unusual until the 1960s when increasing numbers of people sought to buy or build their own homes. The government continues to encourage home ownership. Freedom of choice and individual homes are now encouraged, which contrasts with previous policies of building mass produced housing with little character.

The Netherlands is a small but densely populated country. This leads to situations, particularly around the major cities, where property demand exceeds supply and therefore prices become inflated beyond the reach of many potential buyers. However, this is not so much of an issue in the north of the country.

As a general rule (unless buying for investment purposes) most sources advise against buying property if staying for less than three years. The costs involved in purchasing a property in the Netherlands (and the relatively slow growth in prices at this time) are such that it would be unlikely to prove cost effective.

This page aims to give an overview of the processes involved in buying a property, but it cannot deal with every circumstance. Therefore professional advice should be sought with regard to personal situations.

Be Prepared for the Cost of Buying

There are a number of costs involved as follows:

• 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): 6% of the purchase price. Not negotiable
• Estate Agent's Fee (makelaarscourtage): 2% 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.

Arranging Finance

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.

Finding a Property

Property for sale is most commonly advertised with the help of an estate agent (makelaar). This may be online, in a shop front, in the local press or with a board outside the property. Local papers typically produce a housing (woon) supplement on a Wednesday or Thursday.

Property may be freehold (vrij leen) or leasehold (erfpacht). Many city apartments are leasehold. The terms of the ground rent may put limitations on the amount that can be raised as a mortgage to purchase such properties.

Having seen a potential property advertised the next step is to view it. It is very likely that the prospective buyer will have to make an appointment with the agent to view the house. Be very clear that you are not engaging their services to find a home (unless this is what you want) but simply enquiring about a specific property or properties.

It is common to work with an estate agent (makelaar) and to let them do all the legwork. This has advantages such as saving time and getting to see properties before they are officially on the market. But it does mean paying a fee equivalent to one or two percent of the eventual purchase price (plus BTW (Dutch Value Added Tax)).

If looking for property without an agent, be vigilant with apartments. Some are under the control of a housing authority with its own regulations. They must give permission before the property can be occupied – even if you own it!

• Many properties are advertised with the words kosten te koper attached to the price. This means that the buyer pays the costs
• New build properties may be advertised vrij op naam which means that the price includes costs

The Offer

Once the buyer has found a property that suits them, the first step is to make an offer. Since a change in the law in September 2003, a verbal offer is no longer binding. Under Dutch law anyone who later withdraws an offer because of an inability to organise funds could be liable to a penalty of ten percent of the offer price. Therefore any offer, verbal or otherwise, should be made with the proviso "subject to raising the finance".

A written offer in the form of a Presale Agreement or Contract of Sale (koopovereenkomst) is a purchase agreement drawn up by a lawyer and must be signed by both parties. Buyer and vendor will normally use the same lawyer (notaris) which saves on cost and paperwork. A three-day cooling-off period is allowed for withdrawal without penalty. Once this three-day period has passed, the lawyer will be passed the contract of sale and will then set a date for completion.

• If completion is likely to take more than two months the buyer may be asked to pay a ten percent deposit at the time that the purchase agreement is signed
• The purchaser (or their representative) is expected to consult development plans and possible other public restrictions

During the time between the signing of the Presale Agreement and the agreed data of completion the buyer's representatives will normally need to undertake a valuation (for mortgage purposes) and there may be further inspections of the property.

Completion

A Transfer Contract (akte van levering) is signed by both parties on completion. The lawyer registers the details with the relevant authorities.

On the day of completion the estate agent can (if required) supervise a final inspection of the property by the buyer which may include taking meter readings. The agent normally accompanies the vendor to the lawyer's office for the signing of the transfer deed. As soon as this deed is signed the ownership of the property transfers to the buyer. The lawyer registers the change of ownership with the Land Registry.

Estate Agents

Estate Agents (makelaars) are generally involved in both the sale and purchase and can be engaged by a purchaser or a vendor for a fee. They have a trade association – The Dutch Association of Estate Agents (Nederlandse Vereniging voor Makelaars – NVM).

• Nederlandse Vereniging voor Makelaars (NVM)
  At: Postbus 2222, 3430 DC Nieuwegein
  Tel: 030 608 5185
  Website (in Dutch)
• Information about the NVM in English: Click here

With over 3,600 members, a Code of ethics (including disciplinary procedures) and compulsory training for members, the NVM is a recognised and respected body. They can provide information on registered agents in a specified area. All their agents also have access to funda, the most popular residential property site in the Netherlands. An agent registered with the NVM offers more protection should there be any complaint or problem at a later date.

Many individual agents also have websites where prospective buyers or sellers can give their details and initiate property searches or valuations.

Further Information

• See AngloINFO INFOrmation Page Selling a House or Property in the Netherlands

Information provided by Rijnbeek Real Estate Agency
Tel: 070 363 7700 /e-mail / Website
Javastraat 98a, 2585AV The Hague
Copyright © 2006 Rijnbeek Real Estate Agency. All Rights Reserved

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