Earlier this month, the Dutch government launched a special website for starters on the housing market and in the recent budget plan, there is a proposal transfer tax to be lowered from 2% to 0% for young purchasers between 18 and 35 (from next year). Home affairs minister Kajsa Ollongren said that this group is particularly affected by the tight housing market. “As a starter it’s hard enough to find a suitable home and finding the right information shouldn’t be a stumbling block,” she said, during a special week to promote their interests.
Next year’s tax break will be a boon to many clients at Expat Mortgages because about 45% of them are between 18 and 35. “I think the new transfer tax rule will help in two ways,” says Henk Jansen, founder and partner at Expat Mortgages.
“It will make it easier for first time buyers between 18 and 35, because the costs will reduce by 2% as well as their own contribution, which is maybe even more important.”
He added that a parallel measure to raise transfer tax for investors and private investors from 6% to 8% next year will also make more room for these younger purchasers. “This will reduce the number of purchases by investors, will reduce the competition and so will also have a positive effect for first time (owner-occupied) buyers,” he said.
According to residents’ group Eigen Huis, the rate rise will also apply to parents who buy a house wholly for their children (although parents can give a tax free gift of just over €100,000 to their children to help buy a house if they are under 40).
All this might help to make a bit more space for these new buyers on the market, despite the fact that the Netherlands has a desperate shortage of homes, and measures to restrict the emission of dangerous nitrogen compounds are limiting building projects.
But it’s not the golden solution, adds Jansen.
“What I see happening is people postponing the purchase (or delivery) from the end of 2020 till the beginning of 2021,” he observes. “In Dutch we would use the words ‘ongewenste reactie’ (not the reaction you were hoping for).”
However he believes highly-qualified expat workers are likely to benefit from the measure more than the average Dutch 18 to 35 year old, who typically struggles with raising the 5% in savings to contribute to a house buy and reach the salary needed (due to restrictions on the maximum loan to income for a mortgage).