Buying a house in Amsterdam (part 1/4)
Buying real estate, a house or a property in Amsterdam? Ready to make the career move to the Netherlands or simply want to make a good investment? Here at MyHouse Amsterdam we are designers and makers of luxury interiors, bespoke kitchens and furniture; all custom made. In our job we work a great deal for Expats and internationals coming to Amsterdam. Therefore we get to see their houses on a daily base and have a good feel for the market. This article is a general summary of what to expect and a basic advice for a good start when moving to Amsterdam. A nice longread in 4 parts. Part 1 is a general explanation of the process.
Expast buying real estate in Amsterdam – A good start!
Where do you start when you are a newcomer in the city of Amsterdam. Our first advice is to make a list of your wishes: do you want a house or apartment? Do you like old or modern? Do you want big or small? Do you want a lot of green around or you like a busy center street?
Then just simply take a bicycle and go bike the city. What most people do not realise is that Amsterdam is de facto a small city on a small surface. Plan yourself a bike ride of 3-4 hours and go through the city. Take side streets, go random and bike through the whole city within the ring road. Make notes and pictures and assess what you like. Some neighbourhoods have good and bad parts, it is so locally defined that it can differ per street.
Circle the neighbourhoods and streets that you like on a printed map and remember them.
Funda - The Website
Most houses for sale, let’s say 85% will be listed on the most popular house selling website in The Netherlands named Funda: www.funda.nl
Here you can set your budget and other selections like size, amount of rooms, apartment or house, garden / no garden etc and zoom in per area. Then you see the houses for sale corresponding to your selection criteria with a full set of pictures of their interiors and bespoke kitchens and all descriptions and lay-outs of the rooms. Make a shortlist.
The other 15% of the houses not listed is either sold between brokers and builders themselves or through informal sales (to friends/neighbours etc) or they are selectively listed only on the agents’ website only.
Kadaster – the real estate register
A very good and handy tool to use for house buyers and investors on the Amsterdam housing market is the general register of all real estate (onroerend goed): this is called the “Kadaster”.
Simply fill in the details of the address and postal code and you can buy (very low prices) and see instantly the last selling price, the transaction dates, the ownership, the mortage that the owner has against the property and you can view a report of similar properties. The information on “Kadaster” is very useful and gives a priceless insight. By seeing the mortgage and the last selling price you can also estimate the attitude and strategy of the seller. By comparing prices with other properties you see directly what is a reasonable price.
Peculiarities around real estate in Amsterdam
When buying real estate and house in Amsterdam you will encounter a different situation then that you are used to at home. Many houses are old or even medieval I would say. This means that there problems with construction and special laws around rebuildings. Also the house market and the regulations in Amsterdam have very specific characteristics. In our next blog we will drill down into the Amsterdam housing market peculiarities. A must read before you buy! This blog is more a technical overview of the necessary steps you need to take in the process of buying real estate in Amsterdam.
The “makelaar”: Brokers and agents in Amsterdam
The majority of the sellers will use an estate agent or “makelaar” to sell their property. The makelaar will place the house, apartment or real estate on their own website and on Funda. He will arrange all the paperwork and contract around the sales and he or she will organise the house viewings. In exchange he or she will charge the seller a percentage of the sale (courtage). It is common to negotiate the rate of this commission.
We think that the home buyer should preselect the area of living and the property themselves.
It is not obligatory to have a “buying” agent or “makelaar” as a house buyer, if you want you can do all the negotiations yourself. You will save money but be aware that a “buying” agent has more contacts, negotiation skills and experience on the market. Their motivations are hard to judge though and it is the question what places you above his other stakeholders and clients. Please go on your gut feeling here and be careful in your selections. Ask around and read reviews and do not hesitate to ask your questions.
The process of buying real estate in Amsterdam:
- Check the FUNDA website
- Select your preferred house and area
- Select the makelaar
- Arrange a house viewing
- The bidding and finance
- Appointments with the bank
- Agreement and cancellation
- Technical inspection
- Evaluation of the house value
- Pay tax
- The transaction itself at the notary
- Legal rights and duties
Now you are all set, you have selected an area you want to search for a house and you have made your bike ride and you have taken the step to call for a house viewing with or without your agent…. what is next?
House viewing in practice
Surprise…you are not alone. When you are doing a house viewing in Amsterdam it will be busy. Very busy. They will reserve you a very short timeslot and you have limited time to ask questions and view the house.
Our first tip: stay calm and do not get discouraged. Makelaars (real estate agents) are smart and plan the house visits this way that all the viewers will feel rushed. They plan the sessions with an overlap so you will meet the visitors before you and the ones after you. It is tactics. So ask all the questions you want and really take a good look around. Do not get distracted. At the end the selling agent will tell you the procedure. Most common it is a limit within you have to give your bid and your financial conditions. Most likely it is an impossible short period.
Afterworths don’t forget to take a walk through the street and get a feel of the neighbourhood.
The bidding and finance
The next step for you as a house buyer in Amsterdam is to estimate all the pro’s and con’s of the house. You need to estimate if there is a lot work to be done in the house. If so try to schedule a visit with your contractor.
Now you need to email the selling makelaar your bid. Don’t forget that it is not only the exact price you are willing to pay that will get you the deal.
More important then the amount and exact price are the conditions under which you are bidding. Most bids take place under the condition (voorbehoud) of getting the finance arranged and a technical inspection (state of the house). If you can do the bid without any financial condition (financieel voorbehoud) you are more likely to get the deal. If you also leave out the technical inspection as a condition you will be on the shortlist for sure. Of course the latter depends how the house looks like.
Overbidding or underbidding? Good question. Now the buying makelaar or agent comes in handy. They do know the market well and will advise you well. The common advice is that turn-key real estate will be overbidded and real estate that needs a rebuilding will be underbidded. Although the last years many properties went higher then the asking price.
Don’t be fooled here. There are two tactics for a seller. One is to price the house ridiculously high and see what the buyer will do. The seller takes a chance. The second tactics is to actually offer the house at very reasonable pricing and hoping that there will be many potential buyers that go in rat-race of overbidding. Compare the sales and pricing of similar housing around to judge the right price.
Don’t make rushed decisions. In the end there will not so many people with a serious bidding of the house as you might think. Take yourself and your chances very serious. Much of the process is a game to drive up the price.
Agreement and cancellation policies
In case your bid on the house is accepted, there is no worry. The makelaar – agent will draft and send you the preliminary contract (voorlopig koopcontract). This document is legally binding and states the buying price and the cancellation conditions. It will also state the downpayment you have to do against the buy: usually this is 10% of the purchase price. It can be done in the format of a “bank guarantee” or a direct payment to the buyer’s notary.
Pay ATTENTION: after singing this document you have 3 days to cancel the purchase of the house without any reason!!! If this term is over you need to do the downpayment. If you cancel the purchase of the house without legal and proper reason you will lose the downpayment.
The common conditions to cancel the contract are the financial and technical condition.
About the financial condition: here you need to be aware that you really need to proof that your financing has been refused by multiple banks and institutions and on what base they have cancelled.
If you take a mortgage with the bank they will request you to give them 2 reports: the first one is an independent technical inspection and the second one is an independent evaluation of the house. They will base the maximum amount of the mortgage loan on that value according to a standard formula. This of course in the assumption that your salary is sufficient to get the mortgage.
The technical inspections of your house serves two purposes. The main purpose is that you want to know if your house is technically good and there are no skeletons in the closet. Often you can cancel the deal based on a bad inspection report. If you use this right you will need supportive reports and also financial proof that the fault in the house represents a certain value. Your preliminary contract will state the exact procedure.
If you take a mortgage with the bank they will require and oblige you to have an official technical inspection with an independent agency. Another warning is necessary here as this is a common trap. This kind of inspection is standard and the agency will run a standard checklist of visible faults and problems of the house. It is a very superficial check-up just as a disclaimer to the bank and evaluators. They do not give you any future rights.
If you want to know personally if there are any problems with the house or in case you want a proper report you need to hire a contractor or an official building advisor (next to the inspection for the bank). In that case you tell them exactly what they should check. They will find out for you if there are any hidden failures to the house and give a general advice. They work for you privately and not for the banks’ checklist.
Evaluation of the house value (taxatie rapport)
The bank will also request you the give them an independent evaluation of the value of the house. This report is calles a “taxatie rapport”. You can call any licensed “makelaar” (agent) to do this for you. It cannot be the selling “makelaar”. They will evaluate the value of the house based on economy and market circumstances and on past property taxes.
Actually this is a tricky business. In your enthusiasm you could have overbidded on the asking price. Be aware that the asking and final selling price of the house have nothing to do with the official market value of the house. In Amsterdam the official “value” of the house is often lower then the selling price. As the bank bases their mortgage on this report this is often a deal breaker.
As makelaars and agents depend on each other this is a shady business. A “makelaar” is officially licensed to give an honest evaluation but there have been cases reported where this was not happening.
When you buy a house in The Netherlands you need to pay attention that at this moment you need to pay 2% of the value of the house as a tax. This tax is called “overdrachtsbelasting”, it is a transactional tax on the house. You will need to finance this amount in your mortgage. You need to calculate this tax extra to the selling price. The tax will be taken and paid by the notary, it can’t be paid later.
The tax on the transaction, the “overdrachtsbelasting” will change in 2021. Then a starter on the housing market that is between 18-35 years of age will NOT pay any tax anymore.
Other buyers will pay 2% tax.
Investors that will not live themselves in the house will pay 8% “overdrachtsbelasting”. Pay attention that this is a substantial amount that will be added to the price you pay for the house if you do not live there yourself. As an example: on a house price of 500.000,-- (common for 80 m2 in a popular area) you will then pay 40.000,-- euro extra tax.
The local government wants to discourage investors and speculation and want to encourage starters and you people to buy property.
The house sale itself: the notary
The task of the notary is to guide the transaction and to (de)register all documents involved an settle the payments between the banks and seller. You as a buyer will pay the notary (kosten koper) and those charges will be added to the bill. Most common is in The Netherlands that you see the asking price of the house stated as following: VALUE (K.K.). This means that all notary cost will be for the buyer on top of the asking price. The buyer can chose the notary.
The cost for the notary should not exceed 1000,-- euro.
Legal rights after the deal has been closed – hidden faults/verborgen gebreken
At the notary you have received the key to your new house. Congratulations! You will drink champagne and enjoy the house. What happens when you discover problems in the house? There is a lot of misunderstanding about this part as many “makelaars” will tell you that after the deal is done everything is your responsibility.
This is not true. Basically it breaks down like this, it is called informatieplicht.
Responsibility and duties of the seller: during the sales process he or she is obliged to tell you in writing if he or she is aware of any (visible) problems in the house.
Responsibility and duties of the buyer: during the sales process he or she is obliged to inspect the house and report and ask about obvious and visible problems. If not you are accepting the problem or fault.
So if you visit a house as a buyer and you see that a kitchen or bathroom is halfway finished you either report and negotiate the cost or you silently accept this.
It will be different if the problem or fault in the house is not visible and you suspect that the owner was aware of this. This is called a hidden fault: “verborgen gebrek”. If you can prove in all reasonability that the seller was aware and the problem came out within 3 months you have the right to claim all repair cost of the problem. Hire a building specialist to make an official report.
A good example of this is rotten beams under the floor. Many sellers are aware of the problem but they will not inform you about the problem. You have more rights then you might think but it is always better to prevent and do a thorough inspection upfront.
Adding value to your house: MyHouse Interiors
Many real estate investors or expat will eventually move out or sell their house. The aim of investors and expats is to create value and sell the house at higher value. MyHouse Interiors has successfully transformed expat houses by redoing their interiors and thus creating value by designing and making luxury interiors. The best example is an American client that sold their house 7 months after their rebuilding with a 15% profit.
The services of MyHouse Interiors are designing, producing and installing custom made kitchens, cabinets, wardrobes, bookcases and all wardrobes. We are making high quality design and products. Our custom made kitchens and interiors and worth and give immediate value.
How to design a custom made kitchen?
If you have any plans to install and design cabinetry and custom made or bespoke kitchens please contact us and ask all questions. Also if you need any advice about investing in real estate or housing please feel free to visit our studio in Amsterdam or simply give us a call.