Be prepared for the Dutch housing market: Your questions answered

Buying a house in the Netherlands may work a little differently than the way you are used to. There are different rules and laws, different types of mortgage and financing and so on. I'm Michael Tol, mortgage advisor at ABN AMRO and in this article I will answer the most common questions clients ask me. Check out the video or find out more below.

Buying a house is a big step, and it's important to understand not just the rules and regulations of purchasing a property, but also the Dutch culture of buying. Here's the answers to the most frequently asked questions I get asked about buying a house in the Netherlands:

Is hiring an estate agent a good idea or not?

Hiring estate agents costs money, of course, but they can also save you money. How? Local estate agents are experts in the housing market. They are the first to know when new homes come up for sale. And they know a lot about the neighbourhood - whether there are sufficient amenities close by, for example.

An estate agent can also advise you on whether to carry out a building inspection. A building inspection will give you information on the condition of a house. If your house turns out to have hidden defects, you can renegotiate the price or even cancel the purchase without incurring a penalty.

So is hiring an estate agent a good idea or not? It does depend on your circumstances, but is certainly something worth considering.

Mortgage and market value of your home

When you go house hunting, you naturally want to know what kind of mortgage you can get. This depends mainly on your personal situation, including factors such as your financial income, whether you have outstanding loans and your residence status. If you intend to make your house more sustainable, there are additional regulations.

It is also important for you to know that in the Netherlands, it is possible to get a mortgage for up to 100 percent of the market value. And if you intend to make the house more sustainable, you can even get up to 106 percent. That is more generous than in some of the countries around us. But do note: the mortgage amount is based on the market value of the house. That is not necessarily the same as the asking price or the price you may ultimately agree to pay.

How does that work exactly? If the homeowner selling the house accepts your offer, a valuation report will follow. This will state the market value. This figure may be lower than the asking price and lower than your offer. For example, say that the asking price is 610.000 euros, your offer is 620.000 euros but the market value is only 600.000 euros. The maximum mortgage then available, regardless of how good your financial situation is, is 600.000 euros. You must therefore be able to pay the remaining 20.000 euros yourself.

As you can see, there is a lot involved when determining a mortgage. Therefore, a good place to start is to meet with a mortgage advisor who specialises in helping expats. They can give you all the information you need.

Tax breaks when buying a home

If you have bought a house in the Netherlands, you can benefit from tax breaks in two ways: once off by deducting certain "additional costs" and annually through the "mortgage interest deduction". Here is a brief explanation:

If you buy your own house, you are not only paying the purchase price of the house. There are many other costs that you have to cover. Fortunately, you can deduct some of these additional costs in a one-time tax deduction. This includes costs that you incurred to get the mortgage, such as the valuation and advisory costs. Any notary costs you directly incurred for the mortgage are also tax deductible. So if you are filing a tax return for the year that you bought your house, do not forget to declare these costs.

In the Netherlands, you can also use the mortgage interest deduction (hypotheekrenteaftrek). This means that the interest on your own house is tax deductible, even for expats. This of course results in you paying less tax. However, there are several regulations surrounding this tax deduction, so be sure to be well-informed when claiming for it.

You don't have to do it by yourself

There are plenty of experts who can help guide you through the stages of buying a house. Local estate agents, mortgage advisors and tax advisors can all help make the process run as easily and smoothly as possible.

My colleagues and I look forward to helping you fulfil your housing dreams in the Netherlands! Take part in one of our free online seminars, which are especially for expats buying a house in the Netherlands, or arrange an appointment to check out your options. With over 25 years of experience, ABN AMRO are the experts for expats in the Netherlands.