In this article I would like to touch on some of the pitfalls of buying a home in The Netherlands. Be very careful when making an offer for a property – even verbally. ALWAYS add the caveat “subject to raising the finance”.
Until you actually have an offer of a mortgage from a recognised lending institute (bank or insurance company) you cannot be certain that you have the necessary finance available.
Under Dutch law, if you have not added the caveat, you could be subject to a penalty of 10% of the offer price if you withdraw your offer because you are not able to raise a mortgage.
Actually, the law changed in September 2003. Now the agreement to buy is only binding on the buyer until the presale agreement (koopovereenkomst) has been signed and even then you have 3 working days cooling off period.
Many brokers can produce illustrations from a number of different institutions. We, for example, have the software of several different institutions on our office PC. However anything we produce is nothing more nor less than an illustration! IT IS NOT AN OFFER since, in part, an offer is attached to a specific property.
Many apartments in the major cities are leasehold (erfpacht). Be sure to check this BEFORE you make an offer because, depending on the terms of the ground rent, you may not be able to raise all of the mortgage you require.
Remember that the cost of buying is about 8% of the purchase price (see my next article). Therefore, assuming values will increase at the rate of inflation you should be reasonably certain that you will not be selling the property within 3 years to ensure that you recover your full outlay. However, as argued elsewhere, there is a lively market for rental property so renting your home after you leave The Netherlands is a viable alternative.
Most expatriates start off in rental property and are probably paying €1,000 per month or more in rent. For this amount, taking tax relief into account, you could easily finance a mortgage of between €275,000 and €318,000. In other words, rental replacement is probably the strongest argument for buying a home.
If you are self employed you are required to produce “proof of earnings” when applying for a mortgage Make sure the accounts you produce are endorsed by a recognised accountant. “Boekhouder” in Dutch means “bookkeeper”. No institution that we know will accept accounts prepared by a “boekhouder”.
You will be eventually required to produce a valuation (taxatierapport) – at your expense - to support your application. This MUST be produced by a recognised assayer (taxateur)’ who is not the agent actually handling the sale, but who is a member an association such as NVM or RVT.
Incidentally this valuation is only that. It is not a survey by any means. The assayer will simply walk round the property to get a general idea of its state of repair. No furniture will be moved and no floorboards will be lifted. He may be able to tell you whether the property is on polluted land (very possible in parts of Amsterdam) but little else.
k.k. attached to a price of a property means “kosten te koper” – i.e. the buyer (you) pays the costs. Rarely you may see v.o.n (vrij op naam) attached to property that has just been built – or is in the process of being built (nieuwbouw). This means that the price includes most of the costs.
It is normal and cost saving for the buyer and the vendor to use the same lawyer (notaris) to complete the paperwork of the sale.
It is normal – particularly if completion is likely to be more than (say) 2 months after the original offer date, for you to be required to put up a 10% deposit at the time an offer is made official (i.e. the purchase agreement {koopovereenkomst} is signed). Alternatively we could arrange a bank guarantee for you as part of the mortgage arrangement.
Peter Gibney is a consultant with Strategies based in Dordrecht. Strategies are a fully licensed insurance broker/financial advisor specialising in the expatriate market. Any questions arising from this series of articles or other none related matters may be directed to Peter on {phone} 078 844 0879 or {fax} 084 751 2944 or {e-mail}
This article has been submitted by Peter Gibney