Explanation about buying a house

Explanation about buying a house

Purchasing a newbuild home in and around Amsterdam

Are you looking to buy a property in or around Amsterdam? Prefer a newbuild? Not sure what the process is? Broadly speaking, there are four steps. These are outlined here below.

1 Orientation

The first step is to put together a wish list. Make a list of all the things that you’re looking for in a property. You also need to look at your finances to work out how much you can afford every month for mortgage interest and repayments. If you’re struggling to work this out, then ask a financial advisor for help. Once you know what you’re looking for and what you can afford, the search for a property can begin. In many cases, it happens the other way around. You first fall in love with a property and then see if you can afford it.

Summary:
Put together a wish list, calculate what you can afford, look for a property

2 Decision time

Phase two is the decision phase. First you make your interest in a particular newbuild development known. This typically happens by registering on the new residential developments’ website. This ensures that you’re kept up-to-date on the latest news. Once the actual sales start, you need to formally apply, usually online, for your preferred property or properties. After the deadline, properties are allocated to those who applied. The order that properties are allocated in is determined by using the first-come-first-served principal, a lottery, or other criteria. If you succeed in being offered a property, you can normally choose from a variety of options to tailor the property to your own requirements.

Whilst you’re in discussion with the sales agent it is a good moment to arrange your mortgage. Request offers from multiple providers so that you can compare options. Once you have received a suitable mortgage offer, you can sign the sales contract. Next step is to finalise your mortgage. To become the official owner of the property, you will need to sign the Deed of Conveyance, witnessed by a notary. For newbuilds there is often a period of time between signing the sales contract and exchange of ownership at the notary, so you should be aware of the date your mortgage offer expires. If the offer has expired, you’ll need to request a new offer, sometimes resulting in less beneficial terms.

Summary:
Register your interest, apply (online), property is allocated, discuss options, request mortgage offers, sign sales contract, finalise mortgage, sign Deed of Conveyance

3 Construction

Step three involves building the property. When it comes to residential property, you will be closely involved with decisions regarding things like positioning of electric sockets, the height of the kitchen counter and the direction doors should open. After months of building, the property is ready for hand over. Before taking possession of the property, first check it thoroughly for faults. It may be useful to take someone who knows a bit about building with you. The builder is obliged to fix any faults within three months.

Summary:
Work closely with the builder, check for faults, take possession of the property

4 Moving in

Step four is moving in. After receiving the key, you’ll naturally want to move in as soon as possible, but first you may want to decorate and finish off things that are easier to do before the furniture goes in, such as laying floors. This is only possible once the property has dried out completely. To ensure floors, walls and ceilings are totally dry you’ll need to gradually warm the house and ventilate it well. Once you’ve moved in, to allow the last of the moisture to escape from walls it’s recommended that you position furniture a few centimetres from the wall for the first year.

If your new property is an apartment, you’ll automatically be enrolled as a member of the Owners Association (Vereniging van Eigenaren). As a member of the Owners Association you’ll pay a monthly service fee for the management and maintenance of the complex, electricity used in communal areas and other things.

Summary:
Dry out, decorate, furnish, move in

SOURCE: Bewust Nieuwbouw (https://www.bewustnieuwbouw.nl/stappen/)


Renting a newbuild in and around Amsterdam

There are four steps when it comes to renting a property on the open market. A different procedure applies to renting social housing.

1 Build

Future renters do not have much involvement in the first step: the building phase. Newbuild rental properties are often already built or close to completion once they are offered for rent.

Summary:
Build

2 Orientation

Step two in the process is actually your first step: orientation. You should decide what type of home you would like and the ideal location. You can start looking for a property once you’ve determined how much you can afford and are willing to spend on monthly rent and other costs, such as service costs.

Summary:
Determine your requirements, consider how much you can afford, start the search

3 Decision time

In step three you will need to make a number of decisions. If you’ve already found a newbuild rental property that’s still available, you will need to register your interest. This is often via an online form but may also be done by calling the estate agent offering the property. If the property is part of a larger complex where the rental hasn’t yet started, you’ll need to register your interest online. As soon as rental starts, you will receive a message that it’s time to sign up, as long as your income(s) and other criteria are met. It is therefore important that you read the conditions thoroughly.

Allocation of properties starts once registration has closed. If you are still interested in the property you’ve been allocated, sign the rental contract and move in once the property has been handed over.

Summary:
State your interest, subscribe online, allocation, sign the rental contract

4 Moving in

After signing the rental contract, you can start decorating the property as soon as it’s completed. The only thing left to do is move in. Be aware that with rental properties there are often rules and limitations about what you can and can’t change in the property, and the condition of the property when you hand it back after the termination of your rental agreement.

Summary:
Decorate, move in

Source: Bewust Nieuwbouw (https://www.bewustnieuwbouw.nl/stappen-huur/)

Buying a home ‘off plans’

When buying a newbuild, this is often based off plans (van tekening) before building work has started. In these instances, ensure that you study the plans and technical descriptions carefully. They provide all the information you’ll need about the property, such as dimensions, layout, types of materials being used, and more. If the plans and descriptions aren’t clear enough, ask the developer or sales agent for a written response to your request for more detail about specific things. For example, if it says that windows are made from wood, you’ll clearly want to know if this is softwood or hardwood, as maintenance and life expectancy varies considerably between the two.

Artists impressions and simulations

When buying ‘off plans’, you will likely be shown artists impressions and/or simulations. These may be available online, as well as in promotional literature or during open days. These will help you to visualise how the property will look, although be aware that they are not legally binding in any way. Colours and other features can differ in reality, therefore the plans and technical descriptions should be your main source of information.

SOURCE: Vereniging Eigen Huis (https://www.eigenhuis.nl/)

Payment in instalments for newbuild homes

The total price of a newbuild is made up of the ground costs and build costs (aanneemsom). The ground costs are payable the moment you sign the Deed of Conveyance at the notary. This is the moment your mortgage is confirmed and the first payment is made from it. You are then the official owner of the yet-to-be-built property and the land it stands on. This is not the case if the property is leasehold (erfpacht). In this case, you only own the property and not the land it stands on.

Instalments determined by build progress

Payment of the build costs takes place in instalments determined by the progress being made with the build. The first instalment, normally 10%, is made as the build commences. Subsequent instalments are linked to clear milestones in the build. The number of instalments and percentage to be paid in each instalment varies per build and are outlined in your Deed of Conveyance.

Payment ‘catch up’ for builds that are already underway

If the build has already started, when signing the Deed of Conveyance you will be expected to pay the ground costs as well as any missed instalments. As the builder has already advanced these payments, you will normally be asked to pay interest on these amounts to compensate for the delay.

Never pay in advance

Never pay an instalment in advance. If the builder declares bankruptcy before completing the job, it’s likely that you will lose your money.

SOURCE: Bewust Nieuwbouw (https://www.bewustnieuwbouw.nl/hoe-gaat-betalen-in-termijnen/)

What does the Owner’s Association do?

When purchasing an apartment or newbuild apartment, you automatically become a member of the apartment complex’s Owner’s Association (Vereniging van Eigenaren or VvE in short). The Owner’s Association is responsible for the management and maintenance of the building and ensures that money is set aside for significant long-term maintenance, such as a new roof or exterior painting. The Owner’s Association also ensures the building is insured. Members, namely the complex’s residents, make monthly contributions to this collection.

Co-ownership of the apartment complex

You may be interested to know that you don’t actually buy an apartment, but a share in the whole complex and the right to use an apartment (appartementsrecht). This is why you’ll often see ‘appartementsrecht’ referred to in documents. You don’t just live on your own little island, but you’re a co-owner, together with your neighbours, of the whole apartment complex. Further details of how this joint ownership is split can be found in the Deed of Division (splitsingsakte) and/or internal regulations (huishoudelijk reglement).

SOURCE: Nederlandvve.nl (https://www.nederlandvve.nl/vve-informatie/wat-is-een-vve/)


What is mortgage interest relief (hypotheekrenteaftrek)?

When you take out a mortgage you pay interest on the amount borrowed. The mortgage interest relief ruling means that a large percentage of the interest can be claimed back from the tax authorities. The amount you pay in mortgage interest can be deducted from your income, meaning the amount you pay income tax on is reduced, resulting in a lower tax bill. The government introduced this ruling many years ago to stimulate home ownership.

Interest relief gradually reduced

Until 2013, the maximum interest relief was 52%. Over the coming years, this will be gradually reduced to a maximum of 36.93%. Interest relief can be claimed for a maximum of 30 years.

SOURCE: Wegwijs.nl and Vereniging Eigen Huis (https://www.wegwijs.nl/finipedia/belasting-en-wonen/hypotheekrenteaftrek and https://www.eigenhuis.nl/hypotheken/verhuizen-naar-een-volgende-woning/hypotheekrenteaftrek)

Wat is leasehold (erfpacht) and how does it work?

In Amsterdam and other cities in the Netherlands, a large percentage of home owners don’t own the ground their homes are built on, but they lease the ground. Leasehold is a cross between ownership and rental. You don’t own the land, but have the exclusive rights to use it. You pay the City Council or other private party (the leaseholder) an annual fee for this right, known as ground rent (erfpachtcanon). For many newbuild developments you can buy-off the leasehold for a number of years (sometimes up to 50 years). In Amsterdam, it’s also recently become possible to buy-off the leasehold completely (in perpetuity).

SOURCE: Vereniging Eigen Huis (https://www.eigenhuis.nl/huis-kopen/bestaande-bouw/onderzoeksplicht/erfpacht)

Energy ratings for newbuilds

Energy ratings show how energy efficient a newbuild will be once completed. It takes the building design and any installations, like heating systems and solar panels, into consideration. A property will receive a rating in the form of a letter and colour, which indicates how energy efficient it is. An A rating (green) is the most efficient, a G rating (red) the least. In the Netherlands, newbuild homes have a minimum of an A rating, but often higher (A+, A++, A+++ or even A++++). In the Netherlands, all properties, including older buildings, have an energy rating.

SOURCE: Bewust Nieuwbouw (https://www.bewustnieuwbouw.nl/epc-energielabel-en-nul-op-de-meter/)

The benefits of newbuild at a glance

If you purchase or rent an existing house, you can view it in advance. You can walk around it, see what the view from the window is like, and get a sound impression of the space. With a newbuild this isn’t possible, unless there is a show home. The disadvantage of an existing property is that the décor can be very dated and in need of significant renovation. In addition, you should watch out for hidden problems when buying a home. To get a true impression you often must see through the clutter of the current owner.

With newbuilds you don’t have any of these issues. Compared to existing properties, newbuilds offer a lot of advantages, including:

  • Low maintenance. Everything is new and fresh, therefore in the first few years, very little maintenance is required.
  • Comfortable. The property will be well-insulated against cold and heat, and will meet the strictest standards for sound proofing and air quality. The property will also meet the latest building norms and newest legal standards, including higher doors and ceilings and less steep staircases.
  • Energy efficient and sustainable. Your newbuild property is extremely energy efficient, with an energy rating of A or higher. As a result, your energy bills will be much lower and your home will have a smaller carbon footprint. Furthermore, newbuild developers increasingly use sustainable materials such as wood from sustainably managed forests.
  • Made-to-measure. Before and during the build, you can adapt your home to meet your own requirements, such as a different layout, the addition of a dormer window, a single storey extension, a bay window, roof terrace or additional floor. The level of flexibility varies per home and per development. It is also dictated by the stage the build is at when you buy your home. If the build is almost complete, then there’s very little scope to change things, also with newbuild rental homes when you normally only sign up just prior to completion.
  • Safe and secure. Your home will meet the most recent safety and security norms, such as burglar-proof hinges and locks. Many newbuilds receive the Police Secure Living Seal of Approval (Politiekeurmerk Veilig Wonen). Homes with this seal of approval have a 50% lower risk of burglary.

SOURCE: Bewust Nieuwbouw (https://www.bewustnieuwbouw.nl/voordelen-van-nieuwbouw/)

What is the difference between ‘vrij op naam’ and ‘kosten koper’?

Newbuild projects are always ‘vrij op naam’, which means the vendor is responsible for any transaction costs. These additional costs are already included in the price, such as land costs, build costs, the architect, the builder and the notary, but also the cost of connecting services such as sewerage, gas, water and electricity.

Additional costs for ‘kosten koper’

Existing or renovated homes are normally sold with ‘kosten koper’, which means the buyer bears the costs. Additional costs, such as transfer tax, valuation charges, estate agent’s fees, mortgage arrangement fees and the Deed of Transfer, are not included in the price of the property. As a buyer, these are payable on top of the purchase price.

SOURCE: Geld.nl (https://www.geld.nl/hypotheek/service/vrij-op-naam-kosten)

When does building start?

Many newbuilds only commence once 70% of the properties on the development have been sold. This doesn’t apply to rental newbuilds. These are simply built with the expectation that tenants will be found. The rental normally only commences once the property has been handed over.

Do you need to employ an estate agent to buy a newbuild?

For most newbuild developments, an estate agent appointed by the development company will provide you with the information you need about the location, the sales or rental process and any documents you’ll need. If, as a potential buyer or renter you feel a little uncertain and would prefer independent expert advice, you can appoint your own estate agent. He or she will provide help and guidance at every step of the process.

Certified expat broker

Make sure that you appoint a trustworthy estate agent. Ask around your network for other people’s experiences or opt for a certified expat broker – an estate agent who has proven his or her expertise in guiding expats in the market for a newbuild. A list of certified expat brokers is available on the site of the Amsterdam Association of Estate Agents (Makelaarsvereniging Amsterdam) (https://expats.mva.nl/mva-certified-expat-broker).