Mortgage interest rates are at a record low in the Netherlands so it could be the perfect time to buy a home of your own. Here’s a list of 10 key terms which every prospective home owner should understand before they start hunting for their dream dwelling.
The letters KK in housing adverts stand for kosten koper. This means that all the costs involved in buying a house – of transferring ownership in the land registry, of the drawing up of the contract by a notary and the 2% property transfer tax – are to be paid by the buyer. This adds around 6% to the price of a house, some of which is tax deductible.
Overdrachtsbelasting or property transfer tax, amounts to 2% of the price of your new home. The cost is included in the KK.
The notaris – notary – is a lawyer specialised in family and private law, who draws up the preliminary sales contract for the property and the mortgage deeds (as well as wills, prenuptial agreements and that sort of thing). The notary’s bill for a property of around €250,000 will be around €1,000.
Every year thousands of home owners submit a formal protest about the official valuation of their property under the Wet Waardering Onroerende Zaken (property valuation law).The WOZ is used to calculate how much local property tax (OZB) has to be paid and is based on the highest price someone would be prepared to offer for the property.
The eigenwoningforfait is an extra tax on home owners and is based on the property’s official local authority valuation (WOZ). In 2015, home owners paid 0.75% of the WOZ value of their homes in extra tax, as long as the property was under €1.050.000. For properties worth over a million, it gets a bit more complicated. The tax was introduced years ago as an income equaliser because home owners were considered to be better off than tenants who pay rent. The actual effect of the eigenwoningforfait is to all but wipe out any benefits from the Netherlands’ very generous mortgage tax relief system.
The Nationale Hypotheekgarantie or national mortgage guarantee was introduced in 1995 to encourage home ownership and currently covers premises valued up to €245.000. The guarantee means that if people default on a NHG mortgage, a special home ownership fund (WEW) will pay off the debt. Almost 50% of homes bought under the guarantee limit are financed by NHG. The NHG limit will be cut to €225,000 in July 2016.
The Nederlandse Vereniging van Makelaars is the biggest Dutch estate agents’ association, claiming over 4,000 affiliated brokers. It operates the Funda.nl property search website and provides endless statistics on the state of the property market. Members of the NVM have to have proper qualifications. Every year it throws out members who refused to take compulsory refresher training courses.
8 Verkoopmakelaar and aankoopmakelaar
The verkoopmakelaar is the real estate agent representing the people selling the property who will do his or her best to maximise the price. The aankoopmakelaar is the one acting on the buyer’s behalf. Before you start, you need to make an agreement with your estate agent about what they will do for you and how much it will cost. The fee is known as the ‘courtage’.
9 Erfpacht or eigen grond.
If you see eigen grond in the advert for your dream home, it means you will actually own the land the property is built on. If not, you will be liable for erfpacht, or ground rent, which you will pay to the owner of the land. In many cases this will be the local council, but it could also be a private person or company. Erfpacht, particularly when a private landowner is involved, can be a complicating factor in getting a mortgage.
If you buy a property in an apartment block, under Dutch law you will have to become a member of the VVE or Vereniging van Eigenaren. The VVE (owners’ association) ensures the property is well maintained and insured and deals with communal expenses. You have to pay a monthly fee to the VVE – usually around €50-€100, so make sure your estate agent checks out the organisation’s finances before hand. If the VVE has no cash reserves but the property is in dire need of maintenance, you could find yourself with a hefty additional bill.
For more on buying a house in the Netherlands, in a language you can understand, contact Expat Mortgages.