The changes on the housing market in the Netherlands in 2018
If you are planning to buy or sell a home in Rotterdam, it is important to take financial changes into account. Several changes occurred in the housing market in the Netherlands in 2018.
Here are some key developments:
1. Rising House Prices:
House prices continued to rise, especially in major cities and popular regions. This led to concerns about the affordability of housing, especially for first-time buyers.
2. Changes to Mortgage Rules:
There were some adjustments to the mortgage rules, including a slight increase in the maximum mortgage that consumers could obtain in relation to their income. At the same time, mortgage rates remained historically low.
3. Increasing Popularity of Sustainability:
There was growing attention to sustainability and energy efficiency in homes. Homeowners started investing more in energy-saving measures, such as solar panels and insulation.
4. Tightness on the Housing Market:
There was still tightness on the housing market, especially in the big cities. This led to overheating and situations in which houses were sold above the asking price.
5. Changes in the Transfer Tax:
There were discussions about possible changes in the transfer tax to make the housing market more accessible to starters and private buyers.
6. Discussions on Housing Construction:
There was a growing awareness of the need to build more to meet housing demand. This resulted in discussions about promoting new construction projects.
Please note that these developments are general and that the situation on the housing market can vary greatly depending on the region. For the latest information, it is advisable to consult local news sources and real estate experts.
The maximum mortgage
The maximum mortgage that someone can get is determined by various factors, including income, the value of the home, the mortgage interest rate and any financial obligations.
Here are some important factors that influence the maximum mortgage:
The gross annual income plays a crucial role in determining the maximum mortgage. Lenders often use an income standard, whereby the maximum amount that can be borrowed is a certain number of times the gross annual income.
2. Mortgage interest:
The level of the mortgage interest affects the amount of the monthly costs. With higher interest rates, monthly costs will increase, causing the maximum mortgage to decrease.
3. Housing costs:
Lenders also look at the total housing costs, including mortgage costs and any leasehold, homeowners’ association costs and other fixed costs.
4. Value of the Home:
The maximum mortgage is partly determined by the value of the home. Often the maximum mortgage is a percentage of the market value, and this is called the loan-to-value (LTV).
5. Financial Obligations:
Existing financial obligations, such as loans and alimony, reduce disposable income and therefore affect the maximum mortgage.
6. Own resources:
Contributing your own resources, such as savings, can influence the amount of the mortgage.
It is important to emphasize that the exact calculation of the maximum mortgage may vary between lenders. It is advisable to seek advice from a mortgage advisor, who can assess the specific circumstances and help you obtain the most suitable mortgage.
The maximum mortgage interest deduction
- The maximum mortgage interest deduction in the Netherlands is determined by the tax rate at which you can deduct the mortgage interest. The rate at which mortgage interest can be deducted is gradually reduced and depends on your taxable income.
- The maximum mortgage interest deduction will be further reduced in 2020 from 49% to 46%. From 2023, the deductible interest and costs of the owner-occupied home will still be deductible at a maximum of 37.05%. However, it is important to note that tax laws and rates can change.
- It is therefore wise to consult the most recent information or consult a tax advisor to ensure that you are aware of the latest developments and regulations regarding mortgage interest deduction.
The WOZ value of real estate is increasing
The WOZ value (Valuation of Real Estate) of real estate increases, which has several implications for the owner:
1. Higher taxes:
The WOZ value is used as a basis for the calculation of various taxes, such as real estate tax (OZB) and the notional rental value. If the WOZ value increases, the amount of taxes the owner has to pay may also increase.
2. Mortgage and loans:
The WOZ value can influence the amount of mortgage loans and other financial products. Banks and lenders can use the WOZ value to assess the value of the collateral.
3. Sales value:
Although the WOZ value is not always equal to the market value, an increase in the WOZ value can indicate a general increase in the real estate value in the region. This could affect the resale value if the owner decides to sell the property.
5. Notional rental value:
The notional rental value is an addition to the taxable income of the owner of a home. It is calculated based on the WOZ value. If the WOZ value increases, the notional rental value may also increase.
If the owner does not agree with the determined WOZ value, he or she can object to the municipality. This is common if the owner believes that the WOZ value has been set too high.
It is important for homeowners to be aware of the WOZ value and its possible consequences for taxes and financial decisions.
How can you borrow an extra mortgage?
Obtaining an additional mortgage, also called a second mortgage, can be done in various ways and depends on the individual financial situation.
Here are some common ways to obtain an additional mortgage:
1. Second mortgage:
This is an additional loan on top of the existing mortgage. It is often used to finance major expenses, such as renovations, studies or other major purchases. The terms and interest may differ from the original mortgage.
2. Increase mortgage:
Sometimes it is possible to increase the existing mortgage, especially if the value of the home has increased. This can be done through an additional loan from the same lender.
3. Second mortgage with another lender:
It is possible to take out a second mortgage with a lender other than the original mortgage lender. This can be useful if conditions are more favorable elsewhere.
4. Utilizing surplus value:
If the value of the home has increased, the surplus value can be utilized. This can be done by selling the property and buying a cheaper property, using the difference as capital.
5. Increase in value in the housing market:
If the value of the home has increased significantly, this may provide the opportunity to obtain an additional mortgage.
6. Personal loan or revolving credit:
In some cases it may be cheaper to take out a personal loan or revolving credit instead of an additional mortgage.
It is important to take the financial situation, interest rates, and the conditions of the mortgage provider into account when obtaining an additional mortgage. It is wise to seek advice from a financial advisor before making a decision.
How can you borrow extra for an energy-efficient home?
There are various options for financing energy-efficient measures in a home:
1. Energy saving loan:
Some lenders offer specific loans for energy saving investments. These loans often have favorable terms and lower interest rates.
2. Sustainability loan:
Some municipalities provide sustainability loans to stimulate investments in sustainable measures. These loans can be used for, for example, solar panels, insulation or a heat pump.
3. Mortgage with energy-saving facilities:
When taking out a mortgage, in some cases you can borrow extra for energy-saving facilities. This is possible, among other things, if you buy or renovate a home.
4. Subsidies and schemes:
Check whether subsidy schemes are available for energy-saving measures. Governments sometimes provide financial support to promote sustainable investments.
4. Green loan:
Some financial institutions offer specific “green loans” with the aim of financing sustainable projects. These loans often have favorable interest rates.
Before you decide to borrow extra for energy-efficient measures, it is important to do good research and understand the conditions of the loans or mortgage. It is also advisable to seek advice from a financial advisor to determine which option best suits your financial situation.
Changes to the National Mortgage Guarantee (NHG)
The National Mortgage Guarantee (NHG) is a safety net for homeowners who can no longer pay their mortgage payments. The conditions for NHG may change over time.
Here are some possible changes that may occur:
1. Cost limit:
The NHG cost limit determines the maximum amount of the mortgage for which NHG can be obtained. This limit is reviewed annually and can be adjusted based on developments in the housing market. It is possible that this limit will increase annually to keep pace with price increases on the housing market.
2. NHG premium:
The premium you pay for NHG may change. This is usually a percentage of the mortgage amount and can be adjusted to cover the costs of the NHG program.
3. Conditions and standards:
The NHG sets certain conditions and standards that a mortgage must meet to qualify for NHG. These conditions can be adjusted, for example, to better respond to changing market conditions or to encourage sustainability measures.
4. Income limit:
An income limit may be applied for obtaining NHG. This limit can change based on, for example, the average income development in the Netherlands.
5. Sustainability initiatives:
NHG can stimulate sustainability initiatives by, for example, offering more favorable conditions for energy-efficient homes.
It is important to check the current conditions and standards of the NHG on their official website or with the lender. Mortgage advisors can also provide up-to-date information about the NHG conditions and any recent changes.
The changes in the return percentages (box 3)
The return percentage in box 3 is used to calculate the fixed return on savings and investments for tax purposes in box 3. The amount of this percentage can be changed annually.
Here are some potential changes that could have an impact:
1. Fixed return classes:
It is possible that the government decides to adjust the fixed return classes. There are currently three return classes with different percentages, depending on the amount of capital.
2. Adjustment of percentages:
The percentage for savings and investments can be adjusted. These percentages are used to calculate the fixed return based on the assets in box 3.
The amount of the exemptions in box 3 can be changed. These are amounts that are not included in the calculation of taxable assets.
4. Changes in tax legislation:
In general, changes may occur in tax legislation that affect the taxation in box 3.
It is important to stay informed of current tax legislation and official government announcements regarding changes in box 3. A tax advisor can also be helpful in determining how these changes may affect your personal situation.
The residual debt arrangement has expired
- The residual debt scheme, which previously allowed private individuals who sold their homes at a loss to deduct the interest on the residual debt, has indeed expired. The residual debt scheme was temporarily introduced as a stimulus for the housing market during a period when many people were faced with a residual debt when selling their home.
- Previously, private individuals who sold their own home at a loss between October 29, 2012 and December 31, 2017 could deduct the interest on the residual debt from their taxable income for 15 years. However, as of January 1, 2018, this arrangement has expired.
- This means that for homes sold at a loss after January 1, 2018, the interest on the residual debt is no longer tax deductible. It is important to always consult the most current tax regulations or consult a tax advisor for specific information about your situation.
The legal community of property
The limited community of property, as introduced on January 1, 2018 in the Netherlands, aims to place some restrictions on what is automatically shared between spouses during marriage.
Here are some key points that illustrate the limitations in community property:
Pre-marital assets and debts: Assets and debts acquired before marriage in principle remain the private property of the spouse in question. They do not automatically fall into the community of property.
1. Inheritances and donations:
Inheritances and donations received during the marriage in principle remain the private property of the recipient. They do not automatically fall into the community of property.
2. Community property:
Everything acquired or built up during the marriage falls into the limited community of property. This includes income, assets and debts incurred during the marriage.
Parties can draw up prenuptial agreements with the notary to deviate from the standard arrangement. For example, they can exclude specific assets or income from community property.
The purpose of these restrictions is to do more justice to the individual financial situation of spouses and to provide clarity about which assets and debts are joint and which remain private. It also gives spouses the opportunity to provide tailor-made solutions through prenuptial agreements, so that they can deviate from the standard arrangement if this better suits their wishes and situation.
Mandatory savings for homeowners’ associations
- From January 1, more emphasis will be placed on encouraging homeowners’ associations to save sufficient money for the reserve fund, which is important for financing maintenance work. Here are some comments about the three options you listed:
- Saving through a multi-year maintenance plan (MJOP): Drawing up an MJOP is a good practice, because it enables the homeowners’ association to plan for the long term and reserve the necessary financial resources for future maintenance. This ensures transparency and prevents unexpected financial burdens for individual owners.
- Save at least 0.5% of the reconstruction value: This is an alternative approach if there is no MJOP available. It is a fixed percentage of the rebuilding value of the building and serves as a guideline to reserve sufficient resources for maintenance.
- No reserve fund under certain conditions: This option appears to be allowed under specific conditions, such as agreement of at least 80% of the owners or having a bank guarantee. Having clear conditions and guarantees is important to ensure that the financial stability and maintenance of the building are not jeopardized.
- Encouraging homeowners’ associations to use the reserve fund responsibly contributes to maintaining the value and viability of the property in the long term. Owners and directors of homeowners’ associations are advised to carefully consider these guidelines and options and, if necessary, seek legal advice to comply with applicable regulations.
- If you have questions about specific changes in laws and regulations regarding real estate, homeowners’ associations or other topics, I recommend contacting a professional real estate agent, legal advisor or expert in the field of real estate law. We can provide you with specific advice that is tailored to your individual situation and local legislation.