With interest rates at record lows – making the return on savings minimal – investing in property to rent out is becoming increasingly popular. Buy-to-let has been big business in Britain but is now catching on in the Netherlands as well.
‘A buy-to-let mortgage is intended specifically for someone who wants to buy residential property to rent out,’ says Ralf van Arkel, of Expat Mortgages. ‘For expats who have the financial means, it’s a great way to invest their savings and enjoy extra, tax-free income in the form of rent.’
Buy-to-let mortgages were out of favour in the Netherlands for years but in 2015 the tide began to turn. Expat Mortgages, which specialises in helping expats find a mortgage, has now introduced a special unit Expat Buy2Let, specifically to help international workers looking for an alternative to banks to put their money.
‘Given the incredibly low interest rates right now, it is a much more lucrative thing to do than putting money in a savings account,’ says Van Arkel. ‘Property also represents a sound long-term investment.’
Tax-wise there are benefits too. The rental income from one or two properties is tax-free. Your property (part of your assets), is taxed in tax box 3 of your annual tax return, but the size of your mortgage is first subtracted from your total assets.
The assets left over are taxed, depending on your total net worth, at 0.86% to 1.62% – an added bonus from an investment perspective.
The first bank to reintroduce buy-to-let mortgages in select Dutch cities was NIBC which offered a maximum loan-to-value of 70%. Other players have now come on board, offering mortgages of up to 85% of the value of the property with interest rates of around 3% – well below that offered by NIBC when it started out in the lucrative buy-to-let market.
So who qualifies? You will either need to have Dutch nationality or you need to be registered in the Netherlands. Some banks, such as NIBC, require non-Dutch citizens to be registered in the Netherlands for a minimum of three years but other banks don’t have this requirement.
Your financial situation needs to allow you to pay for your owner occupied or rental place as well as your buy to let property. Sometimes it’s possible to also take potential rental income into consideration. Please check with Ralf van Arkel at Expat buy2Let what your personal options are!
And as for the future, Van Arkel expects interest rates to remain virtually stable in the Netherlands for some time to come. However, he says, predicting what will happen to interest rates is like trying to predict the Dutch weather.
Nevertheless, he adds, ‘buy-to-let is proving to be a stable investment and solid source of extra income from rent.’ After all, demand for good housing in the Netherlands is only set to increase in the future.