So you’re thinking about buying a house in the Netherlands in 2021, right? Just a hunch here, but the world isn’t the same as it was in January 2020.
Instead, a pandemic swept in and now I’m writing this article in my sweatpants, in my tiny home, while my kids are throwing a pandemonium in the room right next to me — and I’m here wondering why we didn’t buy a house in the Dutch countryside.
Alongside the world, the housing market and the rules for getting a mortgage in the Netherlands have also changed. It’s fair to say that you absolutely need to know about these changes if you’re serious about buying a property in the Netherlands.
But enough talk about my sweatpants, you’ve got your own sweatpants to worry about. Let’s get you some insight on the housing market in the Netherlands and what kind of mortgage you can get. But I’m not doing that alone, so I jumped on a call with Roy Bijkerk from Expat Mortgages to get some expert views that actually make sense on this.
Trend: people moving from the cities to the countryside
Let’s start with an interesting trend that would have never been here without coronavirus: people are packing their stuff and are moving to the countryside.
It makes sense. Crowded cities have become hotspots for COVID-19, lockdowns make city life even more unappealing, and since we’re all working from home it makes more sense to have a bigger house and those are generally more affordable in the countryside (or whatever passes for that in the Netherlands).
“People are just appreciating their home more than ever,” Roy explained to me. “It’s been a home — but also an office, school and holiday address. And the ‘working from home’ trend looks like it’s here to stay”.
Roy says that coronavirus has changed people’s preferences to start hunting for housing in areas on the outskirts of major cities.
“If you, with two young professionals, can choose between 56m2 “without garden” in the centre, or three bedrooms and a garden in one of the peripheral municipalities…well, then that choice has become somewhat easier for 2021,” he says.
Of course, the trip to work takes longer. But nowadays we no longer have to be in the office every day, so the commute might be longer, but less frequent.
Oh, meet Roy Bijkerk from Expat Mortgages!
Since I’m in my sweatpants I’m forgetting my manners as well. Meet Roy Bijkerk! Roy helped us out to all the hard answers for all my mortgage-related questions.
He can help you with all these mortgage-matters as well, and he specializes in mortgages in the Utrecht region.
Of course, if that isn’t your area then don’t worry too much — Expat Mortgages has mortgage advisors in every region of the Netherlands. They can answer all your questions and help you grab a mortgage in the Netherlands without speaking Dutch!
Change: transfer tax in the Netherlands has been revamped
If you’re at a serious stage in your life and are eyeballing that particular mortgage, then it’s vital for you to know about a big change to overdrachtsbelasting (sorry for breaking your tongue) — otherwise known as “transfer tax”.
What’s transfer tax, you ask? Well, that’s the tax the government imposes on the price you pay for the house. And while transfer tax used to be 2% for everyone, the government changed it up in 2021 and beyond. I asked Roy for the nitty-gritty details.
“Buyers aged 18 to 35 do not pay a one-off transfer tax when purchasing a home for their own use and are first-time house buyers, so that’s 0%,” says Roy. “That makes buying a home for their own use a lot cheaper for them.”
There’s a catch though, after April 1 2021 (no joke!) if you buy a house for more than € 400,000, there is a 2% transfer tax over the whole figure. So there’s that to consider.
However, if you’re 35 or older, bad news: you’ll still pay 2%. Don’t stress though, because it could be worse — if a buyer purchases a property that they’re not going to personally live at (think of an investment home) they’ll pay a whopping 8%! (used to be 6%)
“The government’s aim is to make the housing market more accessible to young people who need to get their first start on the housing market in the Netherlands,” explains Roy.
It also helps to try and ward off all the investors that are buying up property and are then renting it out for skyrocketing prices.
What’s the effect of coronavirus on the Dutch housing market — and what will happen in 2021?
Despite the coronavirus crisis, Dutch housing prices continued to rise in 2020. According to the Central Bureau of Statistics, Dutch houses were nearly 9% more expensive in November of 2020 than the year before.
Because the mortgage interest rate is still very low, buyers bid up against each other and starters, in particular, are having great difficulty purchasing a home. That and the general lack of affordable housing has caused the prices to rise and rise.
On average, houses were sold for €344,000 in the last month of 2020. In the first 11 months of the year, 209,000 houses changed owners. This comes down to an increase of almost 7% compared to the same period in 2019. Simply put, the housing market continues to heat up.
Housing availability has been under severe tension for some time. The number of houses for sale has decreased considerably, even though many people still want to move or buy their first house. There have been ongoing criticisms that many more houses should have been built earlier.
When it comes to 2021 we probably won’t see a decline in house prices, but it’s most likely they’ll continue to steadily rise, explains Roy.
“The prices are rising in general and sometimes even faster in certain provincial regions than in, say, Amsterdam or Utrecht.”
“As long as the interest rate is low and there are not enough houses for the demand the prices will continue to rise. The building of new houses won’t make any impact on the market until 2025.”
Luckily (or unluckily) while housing prices rise, there’s also this…
Change: you can probably get a bigger mortgage sum in the Netherlands in 2021
Good news if you’re a couple and want to buy a house in the Netherlands: two-income households may be able to get a higher mortgage amount in 2021.
Back in 2020, only 80% of the second income counted towards your borrowing power. But in 2021, the second income will count for 90%.
“To put in contrast, it was only 50% in 2016,” Roy explains. “In concrete terms, this means that if you could borrow a maximum of €300,000 in 2020, your maximum mortgage will be €10,000 to €12,000 higher in 2021”
With this move, the Dutch cabinet also wants the amount of student debt to have less effect on the maximum amount you can borrow for your mortgage. But that’s, as we say in Dutch, a whole other cookie. Best to check with your mortgage advisor on how having a student debt works out for you.
There’s also another reason that you might be able to get a bigger mortgage in 2021: the National Mortgage Guarantee (NHG*) is going up from €310,000 to €325,000 in 2021.
So what’s this you ask?
The NHG is a protection against any debt that’s left if you can’t pay your mortgage due to losing your job or the inability to work. It will cost you 0.70% of the mortgage amount, but you’ll earn that 0.7% back quickly enough because lenders offer much lower interest rates if you opt for the NHG when obtaining a mortgage in the Netherlands. Which then, in turn, enables you to get a higher mortgage (Oh and by the way, the 1% payment is tax-deductible!)
*Nationale hypotheek garantie in Dutch, but it won’t be long until you say ‘NHG’ like a Dutchie
Serious about buying a house in the Netherlands?
If you’re in the process of buying a house in the Netherlands in 2021 or are just curious about the possibilities of you getting a mortgage in The Netherlands, then don’t hesitate and reach out to our friends Expat Mortgages and ask them for some help.
If you’re still orientating on what’s what if you want to obtain a mortgage in the Netherlands then you might also want to check out when Expat Mortgages have their next webinar. They have one more or less every week and it’s the perfect first step to get your head around this grown-up challenge of buying a house and ask everything you always wanted to ask about securing that mortgage.
Roy was terrific with all his advice and I can’t recommend enough to get in touch with him if you’re eying to be buying in the Utrecht region.
Interested in buying a house somewhere else in the Netherlands? Expat Mortgages has mortgage advisors in every region of the Netherlands and they’ll gladly answer all your questions about your personal mortgage situation.
Since they only work with expats and internationals they really know the ins-and-outs when it comes to all the details that play up when it’s a foreign person trying to get a mortgage in the Netherlands (and meeting up digitally through video call is what they’re all about, even before coronavirus).
Most importantly, they also make sure the whole process of buying a house in the Netherlands is all done in proper and understandable English.
Make sure to check out our earlier collab on how buying a house could actually save you money (I know, but it’s true, read it!), you should also make sure to check out more information on buying a house in the Netherlands during coronavirus.
Are you looking to buy a house in 2021? Think your chances for a mortgage have changed in this year? Let us know in the comments below!
Feature Image: PhotoMIX/Pexels