Falling Netherlands house prices leave owners stuck

ruggedtoast

Holland has had some of the highest prices in the world for some time. They've had a complicated arrangement of 100% mortgages, SO schemes and mixed repayment and interest only packaged loans.

It always looked a bit dodgy, at least they do have social housing over there for middle earners though.

In other news they are rubbing their hands together in glee about this over on the forum hpc.co.uk. They think the lady who is in negative equity is hilarious and can't wait to see the same happen over here.

Surely, it couldn't happen here...

ash28

michaels wrote: »

They are actually fairly civilised in a way the English would recognise (and indeed do tend to speak good English).

What may be more interesting although I don't know the figures is that we might be seeing a housing crash in a country that didn't see a huge house building boom nor a construction led surge in unemployment and that has seen considerable immigration...sound like a set of circumstances that are supposedly preventing a crash happening in another north European economy?

They had a credit fuelled boom......pretty much the same as we did.

At the height of the boom you could get 125% interest only mortgages and get marginal tax relief on all of the interest....up to about 52%. The average marginal rate is 42%.

60% of Dutch mortgages are interest only.....and they don't have to have a repayment vehicle.....although there are saver mortgages (amongst other schemes) where you have to save a proportion of the principle over the term of the mortgage - normally 30 years.

The government have since 2011 been reducing the maximum LTV, I think it's currently 105% and set to reduce to 100% by 2018.

They have also removed the tax relief on interest only mortgages from the beginning of this year - although existing interest only mortgages are grandfathered. You can only get tax relief on new mortgages if they are repayment. So I guess new interest only mortgages will die a death because of the tax relief.

ash28

ruggedtoast wrote: »

Thats ended now afaik, my Dutch friends have all put off buying because they were worried about what would happen to prices.

It's only ended for interest only....repayment mortgages still attract tax relief at the marginal rate.

There was a bit of flurry in sales towards the end of 2012, I guess that was because of the removal of tax relief on interest only mortgages and the fact that if you had a property (provisional purchase) in the pipeline by the 31st December 2012 you could take advantage of old rules if your mortgage was in place by 1st January 2014.

There are no plans to change the tax relief regime anytime soon.....I did hear that the maximum rate would reduce to 38% from the current 52% in 2040.

Giving tax relief at that rate must be costing the government an arm and a leg.....great for the mortgage holder though especially if they are a higher rate taxpayer.

Generali

ruggedtoast wrote: »

Thats ended now afaik, my Dutch friends have all put off buying because they were worried about what would happen to prices.

According to KPMG (who you'd kinda hope would be right):

http://www.kpmg.com/global/en/issuesandinsights/articlespublications/taxation-international-executives/netherlands/pages/other-taxes-levies.aspx

There is no wealth tax in the Netherlands. However, wealth is taxed in Box 3 of the Dutch income tax. The wealth is deemed to yield 4 percent income, which is taxed at a fixed rate of 30 percent.

That's the rule that gets you. Your net rather than gross wealth is taxed which is why it makes sense to have a large mortgage in the Land of Orange.

Tancred

Generali wrote: »

One reason for the very high level of debt is, AIUI at least, that there are tax advantages to maximizing your mortgage debt in the Netherlands.

Ah, so they still get a form of MIRAS. Lucky bu**ers.

michaels

Generali wrote: »

According to KPMG (who you'd kinda hope would be right):

http://www.kpmg.com/global/en/issuesandinsights/articlespublications/taxation-international-executives/netherlands/pages/other-taxes-levies.aspx

That's the rule that gets you. Your net rather than gross wealth is taxed which is why it makes sense to have a large mortgage in the Land of Orange.

Does that work - surely havign a larger mortgage increases both your assets as well as liabilities..light bulb moment - unless wealth in your house is not counted for purposes of the wealth tax?

chewmylegoff

michaels wrote: »

They are actually fairly civilised in a way the English would recognise (and indeed do tend to speak good English).

What may be more interesting although I don't know the figures is that we might be seeing a housing crash in a country that didn't see a huge house building boom nor a construction led surge in unemployment and that has seen considerable immigration...sound like a set of circumstances that are supposedly preventing a crash happening in another north European economy?

I saw on the telly that they take horses in the lift with them and hang around in bars singing Mustang Sally so I cannot agree with your conclusion that they are in any way civilised.

Loughton_Monkey

chewmylegoff wrote: »

I saw on the telly that they take horses in the lift with them and hang around in bars singing Mustang Sally so I cannot agree with your conclusion that they are in any way civilised.

I think you are taking a rather insular view about an entire neighbouring EU State who have not done much, if anything, to harm us British.....

.... er

Maybe they give you that impression purely because they walk around in wooden shoes, and are absolutely 'stoned' all the times with drugs...

They are also extremely mean - hence the expression "going Dutch" when you go to a restaurant. Yes, that's uncivilised, but a bit better than 'going Greek' which means going to the restaurant and making some other bu99er pay!

antrobus

Loughton_Monkey wrote: »

I think you are taking a rather insular view about an entire neighbouring EU State who have not done much, if anything, to harm us British........

Granted they do seem oddly devoted to the delights of choco sprinkles amongst other things, but otherwise they seem reasonably civilised. I think they were even kind enough to lend us a replacement king once when we'd got fed up with the incumbent.

Generali

michaels wrote: »

Does that work - surely havign a larger mortgage increases both your assets as well as liabilities..light bulb moment - unless wealth in your house is not counted for purposes of the wealth tax?

My guess is that some other form of wealth (pension? Cash savings?) escapes this rule so you can use that vehicle to pay off your debt at some significant tax point.