Why buy rather than rent a home in the Netherlands?

Article provided by Mister Mortgage, an IN Amsterdam partner.

Buying versus renting in the Amsterdam Area

The tremendous demand to buy or invest in real estate in the Amsterdam Area has earned the city the reputation of being a notorious destination where the demand does not always meet supply. Renting a home when relocating to a new country can be a short-term solution. However, when the time comes to settle down, you will most likely begin to consider whether it is preferable to rent or buy a home in the Netherlands.

Benefits of renting a home in the Netherlands

• Flexibility to leave
• No maintenance costs
• Short-term solution
• Tenant protection laws

Benefits of buying a home in the Netherlands

• Buying is a cheaper solution for the long term
• You build equity when you own a home
• You can afford a bigger home when buying versus renting a home
• Interest-tax deductions
• You can borrow 100% of the property’s value
• You have the freedom to renovate your home and make it feel like your home
• You don’t have to pay capital gains tax when selling a property

Buying a home in the Netherlands

One of the most popular questions that newcomers ask is: ‘Can I get a mortgage if I move to the Netherlands?’ Everyone who holds a BSN number can apply for a Dutch mortgage. You can already check how much mortgage you can afford and start looking for your dream home before relocating to the Netherlands.

The following question is: ‘When is it an excellent time to buy a home?’ Due to the increasing rental prices and decreasing interest rates, the housing market is continuously performing strong. Low interest rates and the housing shortage increased the competition between homebuyers in the last decade. High demand and low supply push housing prices up in the Netherlands.

A Dutch mortgage has tangible financial advantages

• When you purchase a home and take out a mortgage in the Netherlands, you are entitled to a tax benefit by deducting your mortgage interest from your taxable income. You can choose to deduct the interest either monthly or annually.
• Additionally, first-time homebuyers aged 18 to 34 who purchase their first property valued under €510,000 are exempt from paying the 2% transfer tax. Starting in 2025, this exemption limit will increase to €525,000.
• Since 2024, single buyers have been able to borrow an additional amount beyond the maximum mortgage limit. In 2025, this additional borrowing limit will increase from €16,000 to €17,000, giving single buyers a better chance in the housing market, where dual-income households often have larger budgets.
• Another notable advantage is related to gift tax: if your parents have never lived in the Netherlands, or if the gift is made by a non-resident or a resident (who is not a Dutch citizen) who emigrated from the Netherlands more than a year ago, no gift tax is due.

Maximum mortgage amount

A Dutch mortgage is based on the loan-to-income (LTI) ratio, and you can borrow 100% of the loan-to-income. The amount you can afford depends on your annual income and the value of a property.

To close a mortgage in the Netherlands, you need savings. Mortgage closing fees involve a transfer tax of 2% (if applicable), a real estate agent fee, a notary fee, a translator fee, a valuation report, and a mortgage brokerage fee.

Good to know: there are more than 35 mortgage lenders in the Netherlands. Dutch mortgage advisers work with multiple mortgage lenders, while the banks only represent themselves.

Homeowner expenses

As a homeowner, your annual expenses will likely stay, if not stable, then predictable. Initial buyer’s costs aside, you can anticipate your annual costs, such as property taxes and insurance. Should repairs or renovations arise, you yourself sign off on them rather than receive a surprise bill. While most landlords cover major repairs, renters are still often responsible for minor ones. And should you have a mortgage, you can fix and adjust interest payments, giving you more decision-making and a sense of control over monthly expenditures than in a renter-landlord relationship. 

Owning a home adds to your capital

Buying, rather than renting, in the Netherlands provides many international residents, just like their Dutch counterparts, financial benefits and tax discounts. Once you’ve settled in and, usually within a few years, capitalised on your buyer’s costs, another payoff is the comfort that your home is all yours to do whatever you want in and with. And illiquid, though it may be, a home is capital. This means its investment can be put towards another future investment – be it a bigger family home, a future relocation, or other changing circumstances.

Need more advice about how to buy your first home in Amsterdam? Get in touch with Mister Mortgage.