In 2009, after 3 years of living in the Netherlands and taking advantage of being kicked out by my apartment, I took the decision to make a step ahead and buy a house in Amsterdam.
Now I want to describe how is possible to buy a house in Holland and explain why:
- it’s difficult to be ripped off;
- it’s better not to use your savings;
- it’s actually like rent from the bank.
Interview with my favorite makelaar
To answer the common questions I’m getting about buying a house in Amsterdam in 2016, I sat down for a coffee (and an appeltaart indeed) with my favorite makelaar: Hans Busker.
In this 15-minutes audio interview we’ll talk about:
- What happened in the real estate market
- How is the real estate market now (July 2016!)
- Is it a good moment to buy in Amsterdam?
- What’s the process to buy a house?
- How is the mortgage situation now?
- How to invest in Amsterdam without living in Netherlands?
- Why buy-to-let can be very profitable and how to be in the free-market
- The common mistakes foreigners do when buying a house
- Few suggestions for buyers!
Here is the 15-minutes audio interview:
Buy vs Rent
Renting prices, since I arrived here in 2006, went up of something like +30% in 3 years, and I can assure that they where not cheap before either 🙂
The rental market is split between a social system, where there’s a rank-based system to assign houses to a relieved price, and the free market where is normal to pay 1200-1500 euro/month for a decent apartment inside the city.
Beside the rental fee, it has to be considered:
- The deposit: normally it’s one month of rent, but nowadays it’s normal to ask even two months especially if the apartment is fully furnished!
- Agency fees: if the rental agreement is done with an agency, they want to be thanked with a commission of one month of rent.
To summarize, if you find a nice apartment with a rent of 1200euro, you’ll need 1200 x 2 (deposit) + 1200 (agency commission) + 1200 (first rental payment) = 4800eur paid “on the nail”, as we say in Italy.
For people relocating to Netherlands, once realized that this is a place where to stay some years, buy is the best option.
They say that at least 3 years are required not to loose money on the buy/sell procedure, but should take into consideration that NOT buy means pay rent for something like 13-16K euro/year anyway…
It’s very important to have clear ideas.
Consider that in Holland the banks can load up to 5 times the annual salary: know WHAT we can afford is only one of the important elements to base our research on… city’s neighborhood, number of bedrooms and bathrooms, surface, floor number (ground floors almost always came with some garden) are all things that the sooner you decide less time you’ll loose.
I recommend to do this: get pen and paper and draw a table like the one below.
Then pour a glass of whiskey and sit down on your sofa, thinking what is mandatory and what is optional to have in your next house:
Believe me, this simple exercise will make you tipsy and it will make you save lots of time later on.
The website of reference for the house search is www.funda.nl
Funda reunites the associations of house agents (makelaar) and lists 90% of the house on the Dutch market.
Spend some time on Funda is a good idea to understand what is on the market, what are the prices and what are the timings… yes, because a good deal in the city is sold in 1 day while apartments on sale since months are indication that something is not good (or is not nice!).
Suggestions: be REALISTIC and QUICK if you don’t want to loose time and opportunities.
In Italy we use to have a house agency to whom the owner gave the task to sell.
In Netherlands the system expect an agent of the seller (like Italy) and an agent of the buyer.
This way during all the procedure of searching, negotiation, buy there’s an agent that represent the seller interests and one that represent the owner interests. (at least in theory)
It’s not mandatory to have your own house agent (makelaar) but, for who like me has a language barrier is not familiar with the laws, doesn’t want to spend time and wants less risk this should be seen as a sort of insurance to pay…
What does a makelaar do?
A makelaar requires “instructions” with details of what we’re looking for at the moment we’re signing the contract (that is exclusive).
From that moment on the makelaar helps the client:
- in the search phase (they get new deals 1-2 days before they’re listed on Funda.nl…..)
- during the house visits (also more than one per house if needed)
- to evaluate the building especially in regards of registry, foundations, checks about apartment and building
- in the negotiation phase, acting on behalf of the client after consultation
- participate on the meetings with the notary for the sale contract and the property change
Nowadays it’s becoming popular for people to search the house by them self, and involve a makelaar on a later stage to have a professional opinion on the quality of the property.
This reduce the costs, so if you have time to invest on the search it can be a good option.
How-to choose a makelaar?
If someone recommends you one is much better. I entered in the one closer to my place (20 meters) and things went great.
If you like, I can put you in touch with him, I know him since few years and he’ll give you a nice discount (then he’ll pay me a diner, of course!).
Write me en e-mail if you want to know more.
The contract conditions are more or less standard:
1.5% of the buying price of the house.
Some ask a refund of ~400 eur if the buyer decides to cancel the contract and stop looking for a house.
This is to avoid non serious house shoppers, but nowadays things are changing and my makelaar removed this clause and now works on a “no cure no pay” basis. No house, no costs.
OK I like this one
Once you find the house you like, the makelaar does more in deep checks in order to verify that everything is OK and provide all the required info: foundations, status of the ground property, owners association…
Valuation done, you can continue with the negotiation.
Nowadays there’s more room for negotiation compared to the past. In my case we lowered around 10% between asked price and final buying price, but don’t take this as a rule because if the asked price is already good can happen that someone will offer even more…
There we go to the notary, already
This is, they say, the only place where first you buy and then you ask the mortgage.
First meeting with the notary is to write the sale contract, that stops any other negotiation, and has around the table the notary, the buyer and both makelaar.
The contract has a clause that allows to cancel it if no bank will guarantee you the load… but is always good thing to check with a financial advisor as a first thing to understand if there’s any risk to don’t get the amount we need.
By law, who sell MUST give all the possible information about the property.
If you buy a house and after you discover, for example, that there are toxic materials and the seller was aware of it, the owner will be responsible.
The second meeting with the notary will be after the delivery of the house and once verified that everything is as agreed (the house is still there and nobody damaged it or took something out for example).
In this meeting, where a translator MUST be there by law for all the non-Dutch citizens, the ownership will be officially transferred.
The notary acts as a warranty that everything has been done according to the rules, and can be involved also later if any problem arise… I personally called him because of a delay on the money transfer and he was available to talk and give me advises without sending me any bills (hehehe)
The mortgage, and in general the banks, are working in a very different way compared to Italy… also because the finance business is a pillar of Dutch economy with colossus like ING, Amro, Fortis etc.
Maybe this is the reason why Italian banks are so solid (according to someone) while here they have been bail-out to avoid collapsing… 😉
But we’re trying to buy house so let’s stay focused on finding the best mortgage, right? 🙂
There’s an additional 6% of associated expenses:
– 2% is buying tax (before was 6%, now reduced to stimulate the house market in times of crisis)
– 1.5% for the makelaar
– 1500 euro for the notary (yes, you read well!)
– 300 euro for the execution price calculation (the third makelaar)
– 200 euro for the translator (mandatory by law for non Dutch citizens)
First of all the bank can finance up to 105% of the buying price. Considering the 6% costs, generally a 1% down payment is required to buy a house in Netherlands.
One word on the property value: the property value (execution price, executiewaard) is calculated by a third makelaar, theoretically independent, that estimate the value that the house has if the bank needs to see it via auction to a broker.
Usually this is calculated as -10% of the buying price, and is the amount that the bank considers guaranteed with no risk.
Now, the kind of mortgage is a topic that was difficult to digest and be digested by others…
The most common mortgage among expat was “interest only” type, but what does it mean?
It means that for 30 years (standard time) we pay the interest over the loan, without giving it back to the bank.
So, if you load 100, for 30 years you pay for example the 5.5% of interest over the 100 but at the end, the 100 is still of the bank.
Basically, we’re renting from the bank, but how much will be 100 in 30 years? probably much much much less then your house.
This kind of mortgage was popular also because here in Netherlands there’s a tax relief over the mortgage interest for the house where you reside, so that the government refund the interest in the same percentage as the tax paid…
To clarify: if we’re in the 42% tax bracket, the 42% of interest of the mortgage will be refund.
For example, if a monthly rate is 1400euro gross and is interest only… the tax office will give back ~400 euro.
I used the past because since 2011 the situation has changed.
Now the mortgage “interest only” are not allowed anymore. At least 50% of the loan must be repaid.
All this will be better explained by a financial advisor. This is not a consultancy really necessary: you can do it yourself if you’ve time and will to go visit banks to find the best solution for you.
The financial advisors work on a very transparent way. They must always declare if and how much they receive from the bank they recommend. This is to protect the customer and avoid biased opinions.
I personally choose an advisor with a fixed fee (2750 euro) paid by me (inside the mortgage indeed!) but with no commissions from the bank (by law, the system is transparent now).
He suggested me an interesting mortgage schema and the bank accepted it 🙂
There’s still lot to say about the whole procedure, considerations and thoughts…