Buying a home in the Netherlands: dream come true or mission impossible?

Low interest rates on bank loans have made more and more people want to buy a home in recent years. Unfortunately, high demand and increasingly limited supply have made overbidding the norm in recent years, with large cities seeing prices over €50,000 above the purchase price. 

That said, is it worth venturing into the property market in 2022? As someone who ventured into it in the last quarter of 2021, managing to hit that target in about six months, I can say yes. But it takes perseverance and a lot of patience. I should mention that this article is about buying an existing home that someone has lived in for at least a year. If you want to buy a new home (already built or under construction), things may be different.

Here are the steps to take when buying a home:

     1. Searchthe amount to cover the cost of purchasing the accommodation

Even if you opt to get a mortgage, you will need a sum of money to cover the costs of the notary paperwork, the 2% tax on the value of the house (if you are under 35, you do not pay this tax), the fees of the financial consultant, the appraiser and the estate agent (if you have used one) and possibly the report by a building surveyor (bouwkunde rapport) if you have requested one. All this adds up to around €10 000 to €15 000 for a house costing up to €270 000. This money can't come from just anyone, because it goes into debts you will have to repay at some point, which will affect the amount of credit you can get. It can be money you have saved (you will need to prove this with a bank statement from the last 3-6 months), it can be money from the sale of a house, money from your own business, money from a bank loan (you will need a copy of that contract), money received as a gift from your parents (you will need a statement from your parents), money from an inheritance (you will need proof), money won in a competition/race/lottery, etc.

I would like to make a clarification regarding the money received as a gift from parents. In the Netherlands, parents can give their children a gift of up to 106671 euros for the purchase of a house, (not necessarily in one year, it can be spread over several years as long as the threshold of 106671 is not exceeded) provided the children are between 18 and 40 years old. You do not have to pay tax on this amount. If you are over the age of 40, you can receive only € 5677 tax-free. If your parents want to give you more, this is possible, but a tax of 10% is payable on the amount (excluding the 5677). Not immediately, but when you file your annual tax return with the Treasury.

This step is very important because when you apply for the mortgage, you will be asked for a bank statement for the last 6 months, you can't just say you have that money, you have to prove it. The person offering you the money will have to make a statement that they are giving you that money as a gift.

     2. Finding a mortgage consultant (hypotheekadviseur)

At the moment, you can't buy a house in the Netherlands without a mortgage consultant. Costs range from €1500 to €3000. An initial appointment is made to see, depending on your income, how much you can borrow. This first visit is free of charge. If you change your mind during the course of the first appointment, you do not have to pay anything.

     3. Hiring an estate agent

This step is optional, but in my view highly recommended. The experience of a real estate agent is invaluable even if there is a lot of valuable information on the internet. And it proves all the more valuable when it comes to negotiation and the multitude of documents that need to be read and signed at the time of purchase, given that not all of them have accessible language. There are also real estate agents who specialise only in buying (aankoop makelaars) and it would be good to find such an agent, but most of them do everything, so to speak, in other words they have experience both in buying and selling, but also as valuers.

     4. Finding a home

Starting with this step, get ready for a mix of serotonin, cortisol and adrenaline, because what follows is more like a ride on Baron, the most sought-after attraction in the well-known Dutch amusement park Efteling. Don't leave it all to the agent, actively seek it out yourself. The most popular Dutch home sites are funda.nl, huislijn.nl, pararius.nl and jaap.nl. I recommend that you visit them several times a day, because if you don't react within the first few hours, chances are you won't get a call back to schedule a viewing. Homes are most often added to the above sites in the early morning hours (9.00-11.00) or late afternoon hours (16.00-17.00). There are also homeowners who choose to sell their house without an agent and post the ad on Marktplaats or Facebook, although chances are you will find houses that way too. One more thing we did that gave us an advantage was to subscribe to the websites of various estate agents in the area we were targeting. It's free and the advantage is that some agencies (not all) send subscribers the offer of houses that will soon be listed for sale the day before they are posted on the aforementioned sites. As demand is currently very high and supply low, most agents make 10, maximum 15 appointments for viewings, the rest never get a chance to view the house, so this detail can make all the difference. Plus, if you call first, you have a chance to pick the time slot that works for you.

     

5. Viewing the home

There are many details that many house hunters overlook and miss later. What should you pay attention to while viewing?

• year of construction. Houses built between 1920 and 1945 are, contrary to expectations, built of very good quality materials, but are poorly insulated and can be expensive to replace electrical wiring, water pipes (which can be lead, which is extremely harmful to health) and sewage. Many of these houses do not have double glazing, always check this. Houses built between 1945 and 1970 are of poorer quality than those built before the war.  Between 1965 and 1981, prefabricated concrete slabs were used for the foundations of houses, to which calcium chloride was added to make the concrete dry quickly. The disadvantage is that, over time, the concrete can deteriorate and damage the house foundation. So check whether the house in question has Kwaaitaal or Manta grondvloer. And even if it does have such a foundation, it's not necessarily a bad thing. If at the time of purchase, i.e. more than 50 years after the house was built, no damage is found - here you need the opinion of a building expert (bouwkunde expert) - the chances of this happening in the next 10-15 years are slim. In houses built in the above mentioned period it is possible that there is asbestos, check this, although estate agents are obliged to declare this at the time of viewing. In  Between 1980 and 1990, housing was built almost exclusively on demand, with particular attention paid to insulation. There is a chance that asbestos may have been used in these homes as well, ask the agent/owner when viewing. Housing built after 1990 is of very good quality and maintenance costs are low. You just don't find many of these homes on the market right now. 
• The energy class of the home (energyabel). In today's times, energy consumption is a very important issue, so check the energy class of your home. A and B are preferable, C and D are still reasonable, E, F and G are to be avoided.
• Windows. Always check if your home has double glazing and what kind of joinery it has (wooden joinery requires more rigorous maintenance). Also keep an eye on the walls near the windows for mould and damp.
• Land. If you opt for a house, find out if the land on which the house sits is wholly owned by the seller. There are houses where a portion of the land is owned by the municipality or shared with a neighbour.
• Electrical installation. Especially in older houses, this is an important detail. Changing the wiring can be quite expensive, so don't neglect this aspect.
• The crawl space underneath the house (kruipruimte). Next to the front door, there is a space you might want to look in when viewing (if you opt to buy a house and not an apartment). Especially in areas near water, there is a risk that there will be constant damp there.
• Roof. If you are viewing a house, check that the roof is insulated. Especially in houses where the attic is used as a bedroom, it's good to have the roof insulated.
• Neighbours. Find out, when watching, who the neighbours are. Ideally, you should be able to visit the area where the property is located on 2-3 days of the week (at least one of which should be at the weekend) to see what the neighbours are like, don't just rely on what the agent/landlord says.
• Number of candidates. Ask the agent/owner how many applicants have applied for the dwelling. Chances are not everyone will make an offer, but it's good to know your competition.

     6. Offer

You've found your ideal home and want to make an offer. In the Netherlands offers are always made secretly, usually on the move.nl website, where you need to make an account. If you have used the services of an estate agent, they can send the offer to the agent who is handling the sale. Note that anything you offer above the sale price you will have to take out of your own pocket. There are also situations where the selling price of the home is intentionally lower than the actual value of the home precisely to leave room for overbidding. An experienced agent can tell you what the real value is and based on that, you can make an offer. Of course, he won't know what the house will be valued at later (when the contract is signed). There have been situations where the value of the house was much higher than the buyers expected, but vice versa can also occur. Offer only what you can afford, don't stretch yourself beyond your means so you don't regret it later. 

No matter what offers you hear others make (the agent won't tell you the exact amount, just approximately how much the house is listed for), don't be discouraged. Consider that the house was not for you and move on. The more homes you view, the more experience you will gain. In our case, the offer we initially made  wasn't among the first and we even asked permission for a building expert to look at the foundation of the house, which moved us down the rankings. But two weeks later, we found out that the people whose bid was initially accepted dropped out at the last minute. The others on the list before us had either already found homes or had dropped out and that's how they ended up with us. Initially they asked if we could offer more because otherwise they would put the house back on the market, but thanks to our agent's negotiating skills and the convincing work of the buyer's agent (it would have meant another few weeks of viewings and negotiations), they accepted our offer.

     7. A new appointment with the mortgage consultant

You have been accepted the offer you made and you need to get the loan. Make a new appointment with your mortgage consultant, with whom you will sign a contract and who will ask you for a number of documents in order to approve the mortgage. Please note that when you buy a home, you must also take out compulsory home insurance (opstalverzekering). Insurance of the property inside the home is not compulsory, but desirable. 

     8. Signing the purchase contract

 The contract can also be signed digitally. Once all parties have signed, you have three days to change your mind. If you still choose not to buy the house, even though the three days have passed, you will have to pay the seller 10% of the value of the house (waarborgsom).

     9. Reading and signing documents

If you are not fluent in Dutch, you may need a translator to understand the content of the documents you sign. The language is not very accessible, as contracts are involved, so you may find it difficult to understand certain terms. In addition, you need time to go through all these steps, so bear this in mind. You will receive documents from both the estate agent handling the sale of the house and the mortgage consultant and notary. The notary will ask you to sign a few statements about where the money you have for the purchase costs will come from: how much tax you will pay (0 if you are under 35, 2% if you are over 35, 8% if you are buying the house to rent it out or as space for your own business). You still need to prove that you can pay that 10% deposit if you change your mind. If you don't have that money, you can offer a bank guarantee (it costs 10% of the value of the guarantee, for example €250 if the value of the home is 2500000), which the mortgage consultant can take care of.

     10. Recoverable taxes

Some (about a third) of the tax you pay when you buy a house can be reclaimed later from the Inland Revenue. These are: notary costs, costs of valuing the home, costs of obtaining a mortgage guarantee (Nationale Hypotheek Garantie is required because, in the event of the buyer's inability to pay - for example in the event of loss of employment, NHG takes over the debt the buyer still has to pay), the mortgage consultant's fee. You will also be refunded 1/3 of the interest you pay monthly on your mortgage loan.  

     11. Receipt of keys

The day you go to the notary to sign the deed for the house is the day you receive the keys (transport datum). On the same day, about an hour beforehand, another home inspection is carried out.

The whole process can take between 2 months and a year. Even if you find a house as soon as you start looking, it takes at least 8 weeks to get the keys. As I said, arm yourself with a lot of patience, the process can be tedious and frustrating, but in the end you'll find it worth it. Our agent told me the following at the beginning: "patience is eventually rewarded". Her words really resonated with me!

Author: Magda Mincu