Should you rent or buy property in the Netherlands?
With a shortage of around 400.000 houses, it can be a big struggle to get hold of a property in the Netherlands. Whether you are planning to buy or rent, both options have their own challenges. Which of the two is the best option for you? It all depends on your personal situation of course, but with some useful tips, you can make the right decision.
Most new arrivals in a foreign country will start looking for a rental place to be their first home. This way, they can get to know the country, the city, the job, the people, and the new lifestyle.
Most expats have the intention to stay a couple of years and then hop on to a new opportunity in their native country or to another country. Basically, things can change quickly with expats, and they may not be able to plan things far ahead. However, many expats do end up staying longer than what they had in mind in the first place.
Why expats settle down in the Netherlands
Expats often find it an attractive option to settle in the Netherlands. This is partly due to the financial arrangements that the Netherlands has made for expats, such as the tax benefits (30% ruling, for instance). They are also often impressed by the relaxed lifestyle of the Dutch and the high standard of living; such as the excellent health care and well-organised public transport (things the Dutch love to complain about, ironically). And let's not forget the fact that most Dutch people speak English as well!
In general, it is said that buying is better than renting. However, buying is not better than renting if you are not sure whether you want to live in the Netherlands for longer than three years, for example. In that case, it is recommended to rent because buying your own home also has costs associated with it and for a shorter period, these will not outweigh the rental costs.
Furthermore, not everyone can just buy a home straight away. For instance, your probationary period must have expired in order to qualify for a mortgage. In addition, your salary must be high enough for the mortgage amount that is needed to buy a home. For example, you need a gross annual income of at least 75.000 euros for a mortgage of 350.000 euros. So, sometimes you simply have no choice, you can only rent ... or look for a nice partner so that the joint income is sufficient.
With renting, things are flexible as you can (usually) cancel your rent at any time. Additionally, major maintenance work is done by the landlord. Another benefit is that any falling house prices will not affect your rent. You also know your costs and there is normally not a big risk.
If you are indeed planning to stay in the Netherlands for at least three years and your income is sufficient to pay for a home, it could be a good option to buy a property. Purchase schemes and subsidies make it more attractive for starters to buy. For example, if you are between the ages of 18 and 35 and you buy a home for a maximum of 440.000 euros, you do not have to pay transfer tax. That saves you two percent transfer tax.
Also, any increase in the value of the home is yours. In the Netherlands, you do not have to pay tax on the profit. However, you also can run the risk that the value of homes will fall.
Another benefit of buying is that your monthly costs often remain the same for a long time, while rents rise every year. The monthly payment of your mortgage includes a part of the instalment. This means that you will immediately build up a piggy bank, in contrast with renting where you don’t.
How to get a mortgage
First, go to an independent mortgage advisor and have them calculate what the potential, financial consequences would be if you were to buy a house, so you can properly compare your options of buying versus renting.
Buying a house is not the perfect plan. It can have very nice advantages, but certainly also disadvantages. It is good to know these in advance so that you can determine what suits you, what you can bear and whether you are willing or able to take the risks.
Please note that some people think that they cannot get a mortgage with a temporary employment contract. However, this is not true. If your employer wants to state that they would like to extend the contract, most mortgage lenders are willing to grant a mortgage.
Should you buy or rent?
There are pros and cons for buying versus renting. Whether you are staying in the Netherlands for a short time or a long time, whether you are single or living with a partner, your income status, all of these things will affect which is a better option for you. Choose what suits your situation best!