Settling Down Abroad: Buying a Home in the Netherlands as a Foreign Worker

There is a time when every foreign worker who plans to settle down abroad asks themselves, Should I stop paying rent and buy a house?

It’s not an easy decision since many factors come into play, from the competitive market to legalities. But this article will guide you through buying a property in the Netherlands and share everything you need to know before making such a big step.

Let’s get started!

Understanding the Dutch Real Estate Market

Imagine strolling along the charming streets of the Netherlands, with their unique houses and picturesque canals. But before you choose your dream home, let’s explore what makes the Dutch real estate market tick.

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Current Market Status

Right now, the Dutch real estate market is like a puzzle with many pieces. Some areas might have more houses available, while others might have fewer.

House prices in the Netherlands have steadily increased since hitting an all-time low in 2013. But it seems the Dutch property market is cooling down in 2023.

In 2022, property prices were exceptionally high, and bidding above the asking price was common. During the first half of the year, the housing market experienced a significant 10% increase in purchase prices compared to the previous year. The average house price in Q2 2022 was €448,000.

It’s important to know that property prices can change, sometimes going up and sometimes down. The Dutch value their homes, which can affect how much you might need to pay for a house.

What Does the Future Hold?

Depending on how mortgage rates and the amount of money people have to buy homes continue to change in the coming months, it’s probable that the desire for houses will either stay stable or somewhat decrease.

The intense demand for property in the past few years is likely over. This is because, under the present circumstances, individuals cannot borrow the same amount of money as they previously could.

However, we must consider how many homes are available to fully understand the situation. 

The number of houses available for sale in the Netherlands is still relatively low.

Currently, there is a shortage of more than 300,000 homes. To fix this shortage, the Ministry of the Interior is working to increase the number of new homes built annually from 70,000 to 100,000. Even if they succeed in doing this (which won’t be easy), the shortage of homes won’t be resolved before 2030.

Considering both the demand and supply aspects, experts from Dutch banks have differing opinions. Some experts expect a small increase in home prices for 2023 (Rabobank predicts 3% growth), while others believe there might be a slight decrease (ABN Amro predicts a -2.5% decline).

Factors Affecting Prices And Demand

Just like the rest of the world, the Dutch real estate market also has its ups and downs.

One big thing that affects house prices is supply and demand. The prices might increase if more people are looking for houses than are available. 

Other things like the economy, interest rates (which affect how much you pay back when you borrow money), and even the house’s location can change the purchase price.

Popular Places For Foreign Workers

Let’s talk about where you might want to live in the Netherlands. There are some cities and regions that are super popular among foreign workers like you:

• Amsterdam: This city is like a bustling beehive with its international vibe and vibrant culture. However, it’s also very popular, so house prices can be higher there.
• Rotterdam: Known for its modern architecture and diverse population, Rotterdam is a fantastic choice if you’re looking for a place with a bit of an edge.
• Hague: If you’re into government and international stuff, The Hague is the place to be. It’s also close to the beach, which is a lovely bonus.
• Eindhoven: For tech-savvy folks, Eindhoven is a hub of innovation and technology. It’s like a city in the future.
• Utrecht: If you like the idea of a cosy, picturesque city with canals that is not as crowded as Amsterdam, Utrecht might be just right.

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These places have their own flavours and vibes, so you can pick the one that suits you best.

Legal and Regulatory Considerations

Buying a house is like playing a strategic game, and understanding the rules is crucial.

Let’s dive into what you need to know about the legal side of owning property in the Netherlands.

Foreign Property Ownership Rules

The Netherlands welcomes foreign property buyers, but there are a few legal steps to consider. As a foreign worker, you can buy a property just like Dutch citizens, but the process might vary depending on your nationality. Dutch law treats everyone fairly, so no worries there!

Residence Permit For Property Ownership

If you’re an EU citizen, feel free to skip this part. As a national of an EU country, you can stay in the Netherlands for as long as you wish. You do not require a residence permit or need to report to the IND.

But if you are not an EU citizen, you will have to take a few additional steps before buying a property.

Don’t worry, they’re not too complicated!

You’ll need to apply for a residence permit from the Immigration and Naturalisation Service (IND), and this will involve showing that you have enough money to support yourself and your family, if applicable. Once you have this permit, you can proudly call the Netherlands your home.

Specifics For Foreign Buyers

While the Netherlands welcomes foreign buyers, there are a few things to keep in mind:

• Check restrictions: Some areas might have restrictions on property ownership by foreigners, especially in certain regions close to the borders. Make sure to double-check the rules in the specific location you’re interested in.
• Taxes and fees: Buying property involves costs like taxes and fees. These might vary based on where you’re from, so it’s a good idea to consult a professional to understand what to expect.
• Anti-money laundering measures: Like superheroes fighting against bad guys, the Dutch government has measures to prevent money laundering and other financial crimes. This means you might need to provide extra documentation to prove you’re not up to any illegal business.

Navigating these legal and regulatory aspects might feel like solving a puzzle, but remember that professionals, like lawyers and real estate agents, can guide you through the process. 

Understanding the rules will ensure a smooth journey towards making your Dutch homeownership dreams come true.

Pro tip: Sign a preliminary contract.

A presale agreement (koopakte) must be drawn up by a lawyer and signed by both buyer and seller. As a buyer, you can protect yourself by signing a purchase agreement. This protects you if a mortgage lender decides to decline a mortgage application, enabling you to pull out of the sale without penalty.

As buying a home is not an everyday occurrence, the buyer is given a three-day cooling-off period during which they can cancel the deal without any reason. Once this cooling-off period expires, the purchase agreement becomes binding for both parties. Usually, after sorting out the mortgage, a deposit of 10% of the purchase price is necessary. If you don’t have these savings, your mortgage adviser can help you secure a bank guarantee.

Financial Planning and Mortgage Options for Foreign Workers in the Netherlands

Buying a home in the Netherlands requires a solid foundation of financial planning. Let’s take a look at how to manage the costs, explore mortgage options, and secure the funds you need.

Understanding the Costs and Taxes

When you’re ready to dive into the world of Dutch real estate, you need to be aware of the financial aspects. There are various costs involved in buying a home, such as:

• Purchase price: The actual price of the property you’re buying.
• Transfer tax (or property transfer tax): This is a tax you pay to the government when you buy a property. The amount varies based on the property’s purchase price.
• Notary fees: You’ll need a notary to handle the legal aspects of transferring the property into your name. They’ll charge a fee for their services.
• Real estate agent’s commission: If you’re using a real estate agent or mortgage adviser, they’ll usually charge a fee, which is a percentage of the purchase price.

Exploring Mortgage Options

If you can’t pay for the entire property upfront, don’t worry—that’s where mortgages come in. 

A mortgage is like a loan specifically for buying a home. You’ll find various mortgage options in the Netherlands as a foreign worker.

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These options might have different terms, interest rates, and repayment plans. Researching and comparing these options will help you find the one that fits your financial situation.

Mortgage Advisors Offering Mortgages to Expats

Numerous expats seeking to purchase property in the Netherlands often turn to mortgage advisors for assistance throughout the process.

Alongside the array of Dutch advisors available, there’s a notable presence of expat mortgage advisors within the country.

This becomes particularly advantageous if you’re not proficient in Dutch or if you’re a newcomer to the Dutch property market. Noteworthy among the expat-friendly brokers in the Netherlands are:

• Expat Mortgages
• Independent Expat Finance

Also, you can use this mortgage calculator to check your Dutch mortgage rates.

Tips For Budgeting And Financing

Buying a home is a big step, so managing your finances is crucial. Here are some tips to consider:

• Create a budget: Sit down and figure out your monthly income and expenses. This will help you understand how much you can comfortably afford for your mortgage payment.
• Down payment: Generally, you’ll need to make a down payment upfront, which is a percentage of the property’s price. Plan for this expense ahead of time.
• Build a good credit history: A good credit history can help you secure a better mortgage deal. Pay your bills on time and manage your debts responsibly.
• Consult financial experts: Don’t be afraid to ask for advice. Financial advisors and mortgage brokers can provide insights tailored to your situation.
• Plan for additional costs: Beyond the purchase price, consider other costs like home insurance, maintenance, and utilities.

Navigating the Buying Process

Congratulations! You’ve made it to the exciting buying process. Here is a step-by-step guide:

Step-by-Step Process

1. House hunt: This is like the treasure hunt part. You’ll search for properties, visit them, and see which one steals your heart.
2. Making an offer: Once you’ve found “the one,” you’ll make an offer to the seller. Negotiations might follow until you both agree on the price.
3. Drafting the sales agreement: This is the legal part. A sales agreement will be drafted, detailing the terms and conditions of the sale.
4. Notary appointment: You’ll need a notary to handle the official transfer of ownership. Both parties (you and the seller) will meet with the notary to sign the necessary documents.
5. Transfer of ownership: This is when the property officially becomes yours. You’ll pay the seller the agreed-upon amount, and the notary will register the property in your name.

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Assistance Schemes

Unfortunately, there are no specific financial programmes available for first-time homebuyers. This can be challenging for those just starting their journey towards homeownership.

However, since 2013, the Dutch government has relaxed mortgage requirements, enhancing affordability for those making their inaugural foray into the Netherlands’ real estate market.

These alterations predominantly centre around the National Mortgage Guarantee—known as the “Nationale Hypotheek Garantie” (NHG)—an initiative that offers assurance of mortgage repayment should the borrower encounter unexpected challenges.

In 2020, the premium for the National Mortgage Guarantee (NHG) saw a reduction from 0.9% to 0.7%. This translates to potential savings of up to €620 for prospective buyers. 

Additionally, the ceiling price for property eligible for NHG coverage has been elevated to €310,000 and up to €328,600 if the residence meets specific energy-efficient criteria.

Due Diligence And Property Inspections

Just as you’d explore every nook and cranny of a new place, it’s important to do the same with your potential new home. Conduct thorough due diligence, which means researching the property’s history, checking for any outstanding debts or issues, and verifying that all necessary permits are in order.

Property inspections are like giving your future home a health check-up. A professional inspector will look for structural or maintenance issues that need attention. This step ensures you’re making an informed decision and can negotiate repairs if needed.

In the exciting whirlwind of the buying process, remember to take your time, ask questions, and lean on the expertise of professionals. 

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Should You Buy or Rent a Property In the Netherlands?

Although buying a home in the Netherlands can come with high costs, it is generally a wise financial decision in the long run. Despite the prevalence of renting, Dutch house prices are steep and can accumulate additional expenses.

Homeowners can enjoy tax benefits that result in lower mortgage costs compared to renting. This is particularly evident as rental rates tend to increase every year. However, it’s important to evaluate the market in each specific area and determine if it’s wise to make a purchase at this time.

Renting also has its advantages. If you plan on moving frequently or working short-term in the Netherlands, renting provides greater flexibility. You also have fewer responsibilities when it comes to maintenance costs, and there are fewer upfront costs to worry about.

Final Words

For foreign workers, purchasing a home in the Netherlands is a significant decision regarding cross-border transitions. Although it may be complex, this process provides the opportunity for stability, a sense of belonging to the community, and a worthwhile investment for the future.

As you begin your journey to settle down in your new Dutch home, it’s important to consider financial details and the market’s state. We hope this guide provides helpful insights that will empower you to achieve success and contentment in your new life!

Ready to take the next step towards a fulfilling life in the Netherlands? Register on our website today and open the door to new opportunities!