Are you an expat thinking about buying a house in the Netherlands? House hunting in another country can be quite a challenge. You have to deal with different customs and regulations. And to make things worse, everything is in a language that you don’t understand. Make sure you avoid the pitfalls and read my 10 legal tips for the first time home buyer in the Netherlands.
1. There is no agreement until you get a signature
Under Dutch law the purchase agreement needs to be in writing. This means that there is no deal until both the buyer and seller have signed the agreement. On the one hand, this gives you protection as a buyer. You can, for example, make an offer on the phone without taking any risk. On the other hand, the seller can also make use of this. The seller, for example, may accept your offer on the phone but then refuse to sign the agreement if someone else makes a better offer. Your chances of winning the bidding game increase if you hire a real estate agent.
In Amsterdam the purchase agreement is drafted by a notary. In the rest of the Netherlands the purchase agreement is usually drafted by the real estate agent of the seller.
2. Little or no consumer protection
When you buy a TV or a bicycle in a store, you are entitled to a warranty. But when you buy a house, the seller usually is a consumer as well. For this reason you have little or no protection when buying a house in the Netherlands. It would be wrong to assume that the seller is liable for any hidden defects. As a buyer you need to thoroughly inspect the house before buying it. A smart (and acceptable) move is to make your offer subject to a professional inspection. In Dutch this is called a “bouwkundige keuring”.
You will be asked to sign several documents in Dutch. Always demand a digital text file in advance so you can make your own translation using Google Translate.
3. Mortgage debt is full recourse
You may have heard of the term “jingle mail”. This is the practice of posting one’s house keys back to the mortgage company because of negative equity or inability to pay the mortgage. However, this is not possible in the Netherlands. That is because a Dutch lender always has full recourse for your mortage debt. Full recourse means that in addition to the collateral (your house), the lender can also seize other assets from the borrower to repay the debt. For example your salary or your savings account. So buying a house in the Netherlands could mean that you lose more than just your down payment. Up to a certain price level it’s possible to take out an insurance for this. In Dutch this is called “Nationale Hypotheek Garantie”.
You don’t need to purchase a title insurance in the Netherlands. This is because the notary guarantees the validity of the mortgage security to the lender. You do need to take out a home insurance against fire and storm damage. However, if you buy an apartment, the whole building is insured by the owners association. In that case you only need to insure your movable goods like furniture and art. A life insurance makes sense if you are going to live in the house with your partner. Your financial advisor can arrange your insurances. In Dutch the financial advisor is called “hypotheekadviseur”.
5. Hire the best people you can afford
An experienced buyer who knows the local market may choose not to hire a real estate agent and to skip the professional inspection. But for you, this is not a good idea. Ask your friends or co-workers to recommend a reputable local real estate agent. Both fees and services are negotiable. A professional inspection and arranging your mortgage is not included in the agent’s fee. If you need a mortgage to finance the house, it’s a good idea to hire a financial advisor before making an offer. Again, consider asking your friends or co-workers to recommend a financial advisor to you.
In the Netherlands it is common practice for the buyer to choose a notary and to bear the costs for the deed of transfer and the mortgage deed. Dutch notaries are allowed to set their own rates. As a consequence, there are huge differences in costs between notaries. Therefore you should alway compare rates before you pick a notary. This is very easy. Just visit one of the following pages, enter a “placename” and then request a few quotes. It’s completely free.
- Transfer deed only (no mortgage required).
- Transfer deed and mortage deed.
- Transfer deed, mortgage deed and purchase agreement (when you buy in Amsterdam).
- Transfer deed, mortgage deed and cohabitation agreement.
Please note that the rates on the pages above do not include the costs for a translator or interpretor, if required.
6. Costs and taxes
If you’re a first time home buyer in the Netherlands, you’re probably not familiar with the costs and taxes of buying a house. In addition to the one-off transfer tax you will also have to pay annual taxes to the municipality. With an apartment you pay a monthly amount to the owners association. If you buy a house with “erfpacht” (permanent ground lease) then you probably have to pay another yearly tax to the municipality. Transfer costs add up too. You will have to pay for the services of the notary, your realtor, an interpretor, the cost of mortgage execution, and so on. And then there’s the matter of income tax and deductables. Your financial advisor will help you to estimate the total costs and taxes.
7. There’s more than one type of ownership
There are various ways in which a house can be “yours” in the Netherlands. The three most common ones are “eigendom”, “appartement” and “erfpacht”. The first one, eigendom, means that you are the owner of the land and the house. Appartement, the second one, means that you own a share in the building. And the third one, erfpacht, is a leasehold that can be transferred from one person to another. We think you should probably avoid the last one, but that’s just our personal opinion. Note that both a house and an apartment can be subject to either full ownership or only a leasehold. So buyer beware!
8. Movable goods
It’s common for the seller’s agent to provide a list of movable goods. Usually this list has several categories. There will be items that are always included in the sale. But other items are only included if this is agreed. So when you make an offer on the house you must clearly indicate the items you want to be included in the sale. For example the curtains, lamps and closets. We recommend that you discuss this in detail with your agent, to make sure that your expectations are in line with those of the seller.
To apply for a mortgage you will have to meet more conditions than a Dutch person. For example, whether you’ve been living in the Netherlands for long enough and have a residence permit and an employment contract. Questions will be asked about the origin of any personal equity that you invest in the house. This has to do with government supervision on real estate agents, financial advisors and notaries. You will need to prove that your assets have a legal source. The same rules apply to Dutch people, but it can be more of a hassle for you as a foreigner to provide certain documents.
10. How to get out of the sale
We already mentioned the option of making your offer subject to a professional inspection. It’s possible to include this condition in the purchase agreement. In that case you can terminate the contract if defects are discovered that cost more to fix than the agreed amount. However, if you fail to meet the deadline in the contract or don’t provide the required paperwork, you will not be able to get out of the sale.
The same goes for an offer subject to financing. If you sign the purchase agreement without this condition, than there is no way to get out of the sale if your financing falls through. This will result in a fine of at least 10% of the sale price! The usual agreement is that you can only invoke this condition before a certain deadline and need to provide written rejections from at least two different mortgage companies.
There’s no point in blaming your advisors if you’re bound by a contract that you no longer want. Because in the end, you’re the one that chose to sign it.