10 legal tips for buying a house in the Netherlands

Are you an expat who’s 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 if the buyer is a consumer. This means that there is no deal until both the buyer and seller have signed a contract. On the one hand, this gives you protection as a buyer. For example, making an offer on the phone is not binding. This means you are not taking any risks by entering into negotiations. On the other hand, some sellers abuse this rule. For example, the seller may accept your offer at first but then refuse to sign the purchase agreement if someone else makes a better offer. Your chances of winning the bidding game increase if you hire your own 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 from the business owner or the manufacturer. But when you buy an existing home, the seller usually is a consumer just like you. For this reason you have little or no consumer 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 the inability to pay the monthly mortgage costs. 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 downpayment. Up to a certain price level it’s possible to take out an insurance for this. In Dutch this is called “Nationale Hypotheek Garantie”. This insurance means that you are not liable for any negative equity in the event of a forced sale.

Most buyers apply for a mortgage through a mortgage advisor. It is increasingly common to apply for a mortgage online without hiring an intermediary. On this website you will find the interest rates of all popular mortgage providers. Complete the form under “Eerste huis kopen” to receive a free and non-binding offer.

4. Insurance

You don’t need a so-called “title insurance” in the Netherlands. This is because the notary guarantees the validity of the mortgage security to the lender. You do need to get a home insurance against fire and storm damage. However, if you buy an apartment, the entire building is insured by the owners association. In that case you only need to insure your movable goods like furniture and art. A “term life insurance” makes sense if you are going to live in the house with your partner. In the event of death, the lump sum payout can be used to reduce the mortage debt. Your mortgage advisor can also arrange your insurances. In Dutch, a mortgage advisor is called a “hypotheekadviseur”. If you prefer to arrange your insurances yourself, you can visit the following pages: home insurance, home contents insurance, term life insurance.

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 consult 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 only takes a few minutes.

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. When you own an apartment you pay a monthly sum 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 can help you with estimating 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. I think you should probably avoid the last one, but that’s just my personal opinion. I don’t like leasehold (erfpacht) because it can be temporary. This means that you need to pay an unknown lump sum at some point in the future to extend the leasehold for another 20 or 30 years. Note that both a house and an apartment can be subject to either full ownership or just 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 that you want to be included in the sale. For example, the curtains, blinds, ceiling lamps and removable laminate flooring. I recommend that you discuss this in detail with the agent, to make sure that your expectations as a buyer are in line with those of the seller.

9. Financing

To apply for a mortgage you may 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 a permanent employment contract. Questions may be asked about the origin of any personal equity that you wish to invest in the house. This has to do with government supervision on real estate agents, financial advisors and notaries. You may need to prove that your assets have a legal source. This last rule also applies to Dutch people, but it can be more of a hassle for you as a foreigner to provide certain documents.

10. How to cancel your purchase

I 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 the inspector finds defects 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 cancel your purchase.

The same goes for an offer subject to financing. If you sign the purchase agreement without this condition, then there is no way to terminate the agreement if your financing falls through. This will result in a fine of at least 10% of the puchase 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 real estate agent or mortage advisor if you’re bound by a contract that you no longer want. Because in the end, you’re the one that signed the purchase agreement and you’re the one that picked the advisors.

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buying a house in the netherlands

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