Buy to let properties have become quite popular over the last few years. It’s not that surprising since buying an apartment or house in Amsterdam is a good investment. However, with a growing housing shortage for locals and an increase in tourism, Amsterdam is looking for change. The new plans to ban the rental of new-build homes is just a part of the policies to combat spiraling house prices and housing shortages. Here is what you need to know about the buy to let restrictions in Amsterdam.

Would you like to know how you can still apply for a buy to let mortgage in Amsterdam? Please contact us for a free consultation to see what your options are.

About the 2019 plan

At the beginning of 2019, the municipality of Amsterdam published a statement that they noticed an increase in investors buying homes specifically with the intention of renting them out. By then the national government already struggled for three years with an excessive growth of house prices and complaints of the ‘normal’ local house-buyers who didn’t get a chance to buy a property. That needed to change, and Amsterdam announced a few policies to tackle this problem:

  • Enforce maximum prices for newbuild owner-occupied homes for middle incomes.
  • Prohibition of renting out newbuild homes. If you buy a newbuild home, you’ll have to live in it yourself. The municipality is still working on a few exceptions to this rule, like parents buying a house for their children.
  • A ban on the subletting of social houses.
  • Renting out a home through holiday rental platforms for a maximum of 30 days a year (Airbnb-style).
  • Making breaking the holiday home rental rule an official financial crime with corresponding penalties.
  • Create a national registration scheme for buy to let properties.

These rules were either enforced at the beginning of 2019, or throughout the year to tackle the housing problem. The rule that prohibits newbuild homes from being rented out is still a work in progress, and it is expected the municipality will come to a decision in the beginning of 2020. If you would like to invest in a buy to let construction, please take not of these new rules above and ask your mortgage advisor for the latest update about buy to let restrictions.

Is there still room for buy to let in Amsterdam?

Even though there are more and more rules for buy to let, it is still possible to buy a home and rent it out with a profitable rate. There are a few requirements expats need to have before they are able for a buy to let property:

  • You need to either be living in the Netherlands on a permanent basis or be a knowledge migrant with a permanent residence permit to be able to apply for a mortgage.
  • You need to be able to provide an overview of your Box 1 income (taxable income from work and home + overview of your Box 3 income (savings and stocks).
  • You can finance a home with a mortgage up to 80% of the value. The interest-only mortgage can only be applied for up to 60% of the property value. If you require more financing, the remainder must be a linear mortgage. Your mortgage advisor can explain these rules to you in more detail.

If you meet the conditions mentioned above, you can start the process of applying for a mortgage. Please note that buy to let is only possible for long-term rental. Renting out like you would rent out a holiday home is only possible for 30 days in Amsterdam according to the 2019 buy to let restrictions.

Important to know: the annual rental income needs to be 1.25 times the sum of the interest and repayment you do in the first year of repaying your mortgage. However, if you already have a buy to let property which you receive income from, you’ll only need to receive 1.05 times the sum of the interest and repayment.

 

Buy to let mortgage example

To give a clear overview of the steps and what you can expect, we’ll give you an example:

Step 1: Purchasing the property

You have complied to all the rules and bought a home of 250.000. Including the additional costs of the transfer tax, notary costs etc the total costs will be around 260.000 euros. At this stage you have not rented out the apartment or house yet.

Did you know that Expats Amsterdam can take care of the whole process? We are specialized in mortgage advice as well as real estate, so you can leave the buying and renting process to us. A great way to make profit without the hassle!

Step 2: Valuate your property

After you’ve bought a home, the bank demands you deliver a valuation report which gives an indication about the value in a rented-out state. Please keep in mind that a property being rented out will always have a lower value than if you are going to live in the house yourself. This is because the bank believes the tenants will decrease the value of the home a bit whilst living in it (everyday wear in the home). So the bank will probably value the rented-out state of the home around 225.000 euros. Based on this valuation, you can request a maximum mortgage of 80% of the property value, which is 180.000 euros. Your own savings will need to be 80.000 euros.

Would you like to calculate your maximum mortgage for a buy to let property? Our mortgage advisors can help you get a clear overview of your financial status and how much savings you need to buy the home. It is also possible to use the excess value on the properties you currently own, which will make it easier to gather the funds you need for a buy to let apartment or home in Amsterdam. Contact us for more information.

Step 3: Calculate your net rent

The rent prices in Amsterdam have grown to around 30-40 euros per m2, although the prices can differ greatly between the different suburbs. We can advise you on the best and most profitable amount to ask for whilst renting out your property.

To give an example: If you have an apartment of 40 m2 in the city center, it is not strange to ask around € 1.350 euros per month, which can be around 16.200 euros per year. If you take away the costs for the landlord (around 1.500 yearly), you would have 14.700 euros per year.

Step 4: Compare your net rent with yearly costs

If we take into account a mortgage rate of 3% (our advisor can give you the latest overview with percentages), you need to pay per month around 1.012 euros. This monthly amount includes 562 euros repayments per month. Compared to the 14.700 euros you will receive from rent and the 12.144 euros you pay , this is easily achieved and will give you a nice profit each year as well.
You will experience the biggest advantage when you sell the property. Then your mortgage will be considerably lower due to the compulsory monthly repayments.

Do take into account the Dutch tax system, which sees your rental properties as your capital, which is taxed in box 3. Assets are taxed, depending on your total net worth, between 0.86% up to 1.62% per year, which makes this very interesting from an investors perspective. 

Step 5: Revise your financial structure if needed

As you’ve seen, with the actual renting prices in Amsterdam, it’s a very interesting investment to buy to let in Amsterdam. The rent will easily pass the yearly mortgage repayment if you have enough savings to purchase 30% of your property from your own account. So, now it’s only a matter of finding the right property… And we can help you find the right home to rent.

Apply for a free consultation

We from Expats Amsterdam know how difficult it can be to maneuver through the Dutch housing market and comply to the newest rules. Especially with these new plans for the buy to let restrictions in Amsterdam. Especially so since the city and municipality of Amsterdam has different rules than Rotterdam or The Hague for example. We would like to help you with your buy to let investment and make sure you won’t encounter any surprises on the way. Please contact us to make an appointment.

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