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.
1 KK or VON
The letters KK in housing adverts stand for ‘kosten koper’ (buyer’s costs). This means that all the costs involved in buying a house – transferring ownership in the land registry, notarial costs for drawing up the contract and the 2% property transfer tax – are to be paid by the buyer. Together with the cost of your estate agent and mortgage broker, this adds around 6% to the price of a house, some of which is tax deductible.
‘VON’ (Vrij op Naam) means that part of the costs involved are paid for by the seller. This relates to the transfer tax.
‘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 civil lawyer specialised in family and private law. The notary will execute the deed of mortgage and the deed of ownership (as well as wills, prenuptial agreements and that sort of thing). In the Amsterdam area, a notary is also responsible for drawing up the preliminary sales contract for the property.
The ‘Wet Waardering Onroerende Zaken’ is the official value of your property, determined by your local authority. The WOZ value is adjusted once a year and is used to calculate the amount of local council taxes you have to pay, as well as the ‘deemed rental income’ (eigenwoningforfait)
The ‘eigenwoningforfait’ (deemed rental income) is an extra tax on home owners and is based on the property’s official local authority valuation (WOZ). In 2016, home owners pay 0.75% of the WOZ value of their homes in extra tax, as long as the WOZ value is not more than €1,050,000
For properties worth over € 1,050,000 it gets a bit more complicated.
The tax was introduced years ago as an income equalizer 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 will cover homes valued up to €245.000 from January 2017. 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 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’ (selling agent) is the real estate agent representing the people selling the property who will do his or her best to maximise the price. The ‘aankoopmakelaar’ (buying agent) 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. The amount you pay, known as ‘canon’ can be charged annually. It could also been paid for in advance. 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, so make sure your estate agent checks out the organisation’s finances beforehand. 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.