Netherlands buy to let mortgages make apartments a good expat investment

Expats in the Netherlands wanting to enter the buy-to-let market via a mortgage are making a good investment decision.

The continuing popularity of the Netherlands as a tourism and expat destination as well as its position as a haven for British companies fleeing Brexit means property investment is a good deal at the present moment. For expats wanting to enter the buy-to-let market, mortgages are now easier to get as requirements have recently eased. At the present time, property values are on the up, giving landlords the possibility of capital appreciation as well as rental incomes.

Requirements for a buy-to-let mortgage start with proof of long-term residence on a non-temporary basis, and there’s no minimum gross income requirement. Mortgages of up to 80 per cent loan-to-value are available, with a maximum of 60 per cent as interest only. The mortgaged property must only be used to provide long-term rental, excluding short term rentals as advertised online by Airbnb and similar websites. Mortgages from banks in the Netherlands are subject to the banks’ larger-city policies, meaning that finance can only be granted for properties within the country’s larger cities.

Mortgages can be interest-only, covering 60 per cent of the total amount borrowed, and are normally issued with a maximum repayment timeline of 30 years. If more than 60 per cent of the property’s value is needed, the shortfall can be made up by a linear mortgage repayable within 10 years or earlier. Rental income must exceed the total of interest and repayment due by a ratio of 1.25. If the investor is receiving rental income from another property, the ratio drops to 1.5. Your chosen bank will lso require a valuation of the apartment in a rentable state.

For tax purposes, expat buy-to-let landlords’ properties are represented and taxed as capital, but their rental income is not taxed, In the present financial year, the capital is added on to the total value of your possessions, related to asset values and expected returns and entered in Box 3 of the Dutch tax return form. For example, asset values of between €75,000 and €975,000 with an expected return of 4.52 per cent are subject to tax at 1.36 per cent, and those over €975,000 with an expected return of 5.38 per cent are taxed at 1.61 per cent.