Buy-to-let mortgages for expats in the Netherlands: 2018 update

Buy-to-let mortgages for expats in the Netherlands: 2018 update

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Finsens, a financial consultancy firm providing services and expert knowledge for expats, provides an update on the possibility for expats to take out a buy-to-let mortgage to finance a residential property to rent out.

Expats often come to us asking whether it would be possible for them to purchase a rented property, as apartments and residences in the large Dutch cities are considered interesting investments. Before, expats were only eligible for a buy-to-let mortgage when they were at least three years in the Netherlands. However, there are new parties with less stringent requirements for expats seeking a buy-to-let mortgage.

A good investment

Buying an apartment to lease out can often be a good investment since, in addition to rental income, an increase in property value can be expected.

Obviously, you can purchase such properties with your own private cash if you have sufficient funds. However, by leveraging a large part of the purchase price, you only have to use part of your own cash to go through with a purchase. Normally, the annual rental value exceeds the cost of a mortgage, as the largest part of a mortgage is interest-only.

Requirements for a buy-to-let mortgage

The following conditions apply for expats:

  • Expats are required to be in the Netherlands on a non-temporary basis. For example, as a knowledge migrant or for an indefinite period of time
  • Box 1 income, no minimum gross income
  • Financing up to 80% loan-to-value is possible with a maximum of 60% interest only

Provided the above conditions are met, a mortgage can be requested. The buy-to-let mortgage can only be used for long-term rental; Airbnb or any other short-term rental construct is not allowed. The bank has a so-called larger-city policy, which means that only houses in the relatively larger cities can be financed.

Mortgage types

For up to 60 percent of the property value, the type of mortgage can be an interest-only mortgage (with a maximum period of 30 years). If you need financing for more than the 60 percent loan-to-value, the remainder must be a linear mortgage that needs to be repaid on a straight-line basis within 10 years. This can be repaid in part or full any time within 10 years, without a fine.

Additionally, the rental income needs to exceed the interest and repayment based on a 1.25 ratio. So, the annual rental value needs to be 1.25 times the sum of the first-year interest and repayment. If you already receive income from a rented-out property, this ratio decreases to 1.05.

Tax consequences

Rental properties are considered your capital, which is taxed in Box 3. The rental payments from your rented out property are not taxed. For 2018, there are different brackets in Box 3, depending on the total value of your possessions. Please find below the tax levy for 2018 concerning your total capital.

Asset value Expected return Tax (30%)
Up to €75.000 2,87% 0,80%
€75.000 - €975.000 4,52% 1,36%
Over €975.000 5,38% 1,61%

An example of a buy-to-let mortgage

Let us clarify this mortgage structure with an example:

Initial costs

You buy an apartment with a purchase price of 260.000 euros. When you add the additional costs, such as the transfer tax and notary cost, the total cost will be 275.000 euros. The apartment is not rented out yet.

Property valuation

The bank requires a valuation report, and the value of the apartment in a rented-out state is 255.000 euros. Based on this valuation, the maximum mortgage you can request is 204.000 euros (80 percent of the property value). Own savings are needed to the amount of 71.000 euros.

Calculate net rent

The rent is estimated at 15.500 euros per year. The costs for the landlord are estimated at 2.500 euros annually, so the net rent will be 13.000 euros per year. In relation to the net rent, the first-year mortgage interest and repayment should not exceed 10.400 euros (net rent divided by 1.25 or 1.05, if you already have rented-out property).

Compare rent with costs

Assuming an interest rate of 4,5 percent, a mortgage of 80 percent of the market value would be too high to meet the 1.25 criteria. You would need to slightly lower the mortgage. This example does however meet the 1.05 criteria, since a maximum mortgage cost of 12.380 euros would be possible. In this case, you would need to already own a rented-out property.

Revise the financial structure

To conclude, if this is your first buy-to-let apartment, the appropriate financial structure for a property with a total cost of 275.000 euros would be a mortgage of 191.250 euros (75 percent loan-to-value) and a down payment of 83.750 euros.

A worthwhile investment

Whether a buy-to-let rental property is a good investment for you depends on whether you can meet the mortgage conditions, how much of your own savings you have available and if you are prepared for the financial management that is required.

If you are prepared to invest for the long term, a buy-to-let apartment can often turn out to be quite a profitable venture.

The author of this article, Henk van Seijen, is a partner at Finsens. To learn more about buy-to-let mortgages, contact Finsens:

Henk van Seijen


Henk van Seijen

With 20 years of experience Henk van Seijen is the professional to contact mortgages and financial planning. He is partner at Finsens.

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Leave a comment

Mediomen 10:29 | 20 March 2018

Hello Henk, thanks for your article! I have a question ..maybe a silly question...banks need to have a guarantee to distribute a mortgage, is it the rent the only guarantee or, as a "normal" mortgage, I must have a permanent job contract (salary)?

Susan D. 13:23 | 11 June 2018

Hello! Thank you for the article, I found it very helpful! I have a question regarding insurance for a property to let in Amsterdam. Would it be possible to buy a "landlords" insurance to cover built-in appliances such as a new cooker, a granite counter top, etc? Many thanks! Kind regards, Susan

Emilie 10:03 | 11 December 2018

Dear IamExpat team, just wanted to let you know that this article is invalid. I was surprised to read Finsens could provide a buy to let mortgage with no income required (where all other buy to let mortgage brokers require a min of 45k income/year). So i took an appointment with Finsens to check and I was right: you cannot get a buy to let mortgage without minimum income unless you are a professional investor e.g committing of buying several apartments and build a real estate portfolio in the next 2-3 yrs . So I am not sure if this "misinformation" from Finsens in your article is intentional or not but i think it should be removed/amended to reflect the truth...otherwise it's false advertising.

HenkvanSeijen 11:49 | 11 December 2018

Hi Emilie, Thank you for your comment. For a fact you can get a buy-to-let mortgage without a minimum income. However the rules have changed recently. When you do not meet the 45.000 euro income and you don't have a property for renting out yet, you need to show the potential that you could purchase three properties over the next three years. We will update this in the article for the 2019 update. Kind regards, Finsens

Evelina Sever 14:13 | 18 January 2019

My partner has bought his house withing NHG scheme. However, we plan to move to another country for several years. What could be to optimal solution in our case. 1) can we rent out the house those several years in order to pay out the debt or it is against NHG policy? 2) if NHG does not let us rent out the house, can we end up with NHG and turn into normal bank loan scheme so that we could rent it out?

RichmondAddo2 15:49 | 30 May 2020

Dear IamExpat team, I wanted to find out from you guys if there exists a group of expats who are already investing or looking into investing in real estate in the Netherlands. This is towards the purpose of sharing experiences and getting help as a prospective newbie. thanks in advance.