Taking out a mortgage online might ease some of the pain, but you won’t be able to escape the jargon altogether, especially if you are a first-time buyer. So, here is a quick explanation of 10 words relating to the cost of buying a home which you really do need to know before starting the process.
This is basically a small percentage of the official value of your property which is added to your income and taxed. In 2021, this is 0.5% for properties valued at under €1,100,000. Often, this can be offset against your mortgage interest payments.
The Netherlands is one of the few countries in Europe with such a generous tax break on home ownership. This means that you can offset the cost of your interest payments against tax for a maximum of 30 years. In 2021, the rate of deduction is 43% but this is gradually being reduced by the government.
This means that all the costs involved in buying a house – transferring ownership in the land registry, notarial costs for drawing up the contract and the property transfer tax, if applicable to you – are to be paid by the buyer. This usually adds up to around 5% of the value of the property.
Often in the Netherlands, a house sale will involve two estate agents, one acting on behalf of the seller and one acting on behalf of the buyer. If you use an estate agent to negotiate the sale on your behalf – and you probably should, given the pressure in the Dutch housing market at the moment, you will have to pay a fee for their services. The amount is usually open to negotiation but will probably be between 0.85% en 1.25% of the purchase price.
A civil lawyer specialised in family and private law who will execute the formal documents involved in buying a home. You cannot buy a home without the involvement of a notary, who will charge you a fee of roughly between €800 and €1,900, but you can deduct the cost from tax.
‘Overdrachtsbelasting’ or property transfer tax, amounts to 2% of the price property for most people but in 2021 was cut to zero for first-time buyers under the age of 35 as long as the property does not cost more than €400,000. Worth pointing out here is that the average price buyers paid in the first quarter of 2021 was €410,000.
A formal report valuing the property by a licenced valuation company. Your mortgage provider will want to know if the property you are buying is worth the money. Reckon on about €500 if the valuation is straightforward, but you can find them cheaper if you shop around.
This means the property has been sold, as long as certain conditions are met – often relating to the financing. You’ll see it on websites like Funda, for example, alerting you to the fact that perfect house in Amsterdam has probably been sold. It is becoming increasingly common in the Netherlands to buy a property without this clause, but you should only do it if you know you will have no problems getting a mortgage or have a lot of cash to spend.
If you buy a property in an apartment complex, under Dutch law you will have to become a member of the ‘Vereniging van Eigenaren’. The VVE ensures the property is well maintained and insured and deals with communal expenses. There are no hard and fast rules about how much you will pay but reckon on at least €100 a month for a modest apartment in a small block, more if your apartment is in a listed building or has additional facilities.
The ‘Wet Waardering Onroerende Zaken’ is the official value of your property, determined by your local authority. The WOZ value is adjusted once a year, based on price movements in your neighbourhood, and is used to calculate the amount of local council taxes (OZB) that home owners pay. If you buy a house in Amsterdam, for example, in 2021 you will pay 0.0428% of the value of your property in local tax, in The Hague 0.0516%