The 2018 Dutch housing market is becoming even more interesting for expats and locals, partly thanks to rising WOZ values which, at first glance, don’t seem like much of a benefit.
Expat Mortgages, an independent mortgage broker for expats, explains the new WOZ declarations and how it affects expats looking to buy a house in the Netherlands or let apartments to others.
Expat Mortgages is an independent mortgage broker for expats who want to buy a house in the Netherlands and need a mortgage to realize their homeownership dream. For more than ten years, they have become a specialist in providing expats of all nationalities with home financing solutions, walking them through the entire process from the mortgage application to life insurance and tax advice.
WOZ value in the Netherlands: a brief overview
When buying a house in the Netherlands, expats will become familiar with a number of acronyms – WOZ is just one of many. The WOZ waarde (valuation of immovable property), as it is known, is the value of a property as determined by the municipality; the municipality provides a WOZ declaration each year. The municipality does not determine the individual value of each house in the neighbourhood – an outdated, dilapidated house in the same neighbourhood as a modernised, expanded house will have similar, if not the same, WOZ value.
The WOZ value is used by the municipality to calculate certain taxes, such as property tax (OZB), while the water authorities use the WOZ value to calculate water tax. The Dutch tax authorities also use the WOZ value to determine income tax. Thus, the higher the WOZ value, the higher the taxes you pay.
Current WOZ values on the rise after years of decline
In August 2016, Statistics Netherlands (CBS) reported that the average WOZ value in the Netherlands had risen for the first time since 2010, when it was EUR 242,000 – the highest it had been since the law was introduced in 1997. It subsequently dropped steadily over the following years, falling to EUR 206,000 in 2015—the lowest it had been since 2006. In 2016, the WOZ value rose 1.5 percent to EUR 209,000, a small but promising incline.
Benefits of a high WOZ value
While a high WOZ value generally leads to higher taxes, there are advantages to higher WOZ values. Those with a mortgage – one that is not backed by the National Mortgage Guarantee (Nationale Hypotheek Garantie, NHG), which provides a safety net – can effectively lower their interest rates by entering a lower risk category on the mortgage.
Each bank has its own risk classes, so the ability to lower your interest rate – and how much it can be lowered – depends on the bank with which you have your mortgage. ING, for example, currently has 11 risk classes, and it is therefore easier to enter a lower risk class. For most mortgage lenders, the determination of the WOZ value is enough reason to offer lower interest rates; other lenders may ask for additional independent property appraisals.
Those that are planning to sell their current homes may find a higher WOZ value is more attractive to buyers – a house that looks like it will only increase in value is, after all, a better investment.
Landlords of social housing or regulated apartments or houses in the Netherlands that are on the rental market may be able to increase their monthly rent price if the maximum allowed rent price, calculated with the current WOZ value and with the maximum allowable rental price increase, is higher than the current rent price.
Advantages of a low WOZ value
Lower WOZ values lead to lower property taxes – that is, of course, the main benefit. However, a lower WOZ value can also lead to a reduction in other taxes, including inheritance tax. Those that inherit a home may be hit with a high inheritance tax. As of 2017, if the value of the inheritance is above EUR 122,269, you may pay 20, 36 or 40 percent depending on your relation to the deceased.
Other taxes, including the taxes levied on those with an investment property or vacation home in a different municipality – called the forensenbelasting – are also affected by the WOZ value.
Find your Dutch WOZ value
In October 2016, the Dutch government launched the WOZ-waardeloket, an online hub on which anyone can search for the WOZ values of their neighbourhood. However, since it is newly launched, not all municipalities have been added.
To maximise the benefits of the WOZ value – and reduce unnecessary expenses – homeowners may contest the determined WOZ value if they believe it to be too high or too low; they cannot, however, contest the taxes they pay based on the determined WOZ value.