There was some good news for home buyers in this week’s budget with the announcement of a massive financial package to boost new residential development. There are also signs that house price rises are slowing down, although interest rates are shooting up and the issue of foundations continues to be confusing. This and more in the latest housing news round-up.
Budget briefing
There was not much in the way of direct measures impacting on the Dutch housing market in this week’s budget. For example, the government did not announce any new changes to the current mortgage interest deduction set up, although there will be a slight rise in income tax rate in the first and second tax bands, which will have a minimal impact on your rebate.
Housing minister Elanor Boekholt-O’Sullivan did come up with a string of measures she hopes will boost supply in the rental sector and new construction, and is pressing ahead with plans to cut the property transfer tax for holiday homes and investment properties from 8% to 7%.
Most relevant for would-be home buyers? “Plenty of investment in large scale developments of new homes, so if you are looking for a new-build property, you could be lucky – although the changes will take time to filter through,” says Matthijs van der Heijden, a mortgage advisor with Expat Mortgages, which has been helping internationals buy a home for over 20 years.
The government is also putting a further €100 million into a special fund to help first-time buyers get a foot on the housing ladder.
Interest rate increases
Over the past 18 months interest rates have been pretty stable but have been trending upwards since the second quarter of the year, and are currently rising sharply as geopolitical uncertainties continue.
“We are not yet seeing these higher rates have an impact on house prices,” says Matthijs, “but there does seem to be a little bit of room for negotiation. And some buyers are able to have a second viewing of a property before they decide whether to put in a bid.
“So there is more opportunity for people who don’t want to rush into a purchase. And we have noticed that some estate agents are helping their clients to negotiate on or just under the asking price.”
The higher interest rates are also making it more important to have some savings if you are planning to buy, just to keep your costs as low as you can. “If you have €50,000 that you can put down towards the cost of your house, that means €50,000 you won’t have to borrow at well over 4% interest,” Matthijs points out.
Ask your mortgage-related questions
Expat Mortgages will be at the IamExpat Fair in Eindhoven on October 3, so come along and meet the team in person, or sign up for an online or in person webinar, such as the one on September 30. “Getting out and meeting people is a terrific experience,” says Matthijs. “The first thing we tell prospective home buyers is that they should realise it will be a very different experience than in their home countries.”
Seminars, whether online or in person, are a great way of getting direct answers to your questions and sharing your experiences with others. “We also try to focus on the more specific situations – people who have not even moved here yet, and entrepreneurs who may not have been active in the Netherlands for more than a year, when most banks want three years,” says Matthijs.
“We’ve also seen an increase in the number of PhD students wanting to buy, and banks are becoming a little bit more lenient. They used to say ‘no permanent contract, no mortgage,’ but that is changing as well.”
More homes on the market?
Despite there being room for negotiation in some parts of the market, the shortage of cheaper homes to buy is continuing, and single people or single-income families wanting to buy a home are still facing an uphill struggle. Demand continues to be very high for properties at the lower end of the market.
“Things have been very slow over the summer, but now more people are getting out there and looking,” says Matthijs. “And you can still expect to have to overbid if you are looking at cheaper properties. Much depends on what areas you are looking in as well.”
The fundamentals of foundations
Since April, banks have been taking more account of a property’s foundations when deciding whether or not to back a mortgage application. As yet, says Matthijs, there is no overall consensus about what to do if a property’s foundations are in need of urgent, or not-so-urgent, action. “It is primarily the bigger banks which have been the frontrunners on this,” says Matthijs. “It is very early days.”
“However, you can assume if the report shows there is €100,000 worth of repairs which need to be done before the house is properly stable, the banks are going to wonder how this is going to be paid. This could be done, for example, by increasing your mortgage loan – although many people are nowadays stretched to capacity because of the high house prices – or through having the savings in your bank account. One way or another, your bank will want to know if you can pay for the work.”
Are you thinking about buying a home in the Netherlands? Make an appointment to talk directly to a mortgage advisor and find out how much you can borrow.
