The housing market in Amsterdam is crazy and buying a flat is extremely challenging.
“Thanks Peter, now please tell me something I don't know.”
You can complain about it (as we all do) or simply accept it and prepare a game plan.
My wife and I have been searching for a good deal for more than 6 months and have gone through the whole process of buying a property as a foreigner, so I decided to write about it.
This is an article I’d have like to read when I started my journey. There will be many insights shared but no recommendations of specific services. No promotional bullshit.
Where to start?
A typical start to the flat-search journey is to ask your friends and colleagues—who already bought a house—about their experience. Everyone is smartass after they’ve “made it.”
Every case is different. Also, after people make what’s usually the biggest financial decision of their life, they want to validate their decision, basically telling you that they got a very good deal because they were lucky, smart, etc.
But as the market is so crazy, most of your friends statistically didn't score a great deal. So listen to their advice carefully (including everything mentioned in this blog post) and focus on facts.
Talk to as many people as possible, ask them questions, and draw your own conclusions.
Do you need an agent?
After talking to a couple of friends and reading some comments online (Reddit), we decided to start searching without the help of an agent (makelaar in Dutch).
In retrospect, I consider this a good decision. I heard stories about bidding wars and agents who really try to trick you. Then I had a call with an agent I’d been recommended. The call was a disaster and confirmed our decision to continue without an agent.
So we started to browse Funda and schedule our first visits. We had some idea of what we were looking for but after visiting a couple of apartments, everything looked clearer and we understood the market better.
We were actively searching for 2 months and placed 4 bids. None of them were successful.
Then, I had a chat with a group of friends who had recently bought a flat. They are Dutch, working in sales, and all used an agent. They all hated how the system of buying a flat in Netherlands works but explained to me that without an agent our chances of buying an apartment are very low.
I asked for agent recommendations and eventually made the decision to work with one of them.
Having experience searching for a flat by ourselves gave us a very clear idea of what we wanted, where we wanted to buy, and what compromises we were willing to make.
What can an agent help you with?
- Evaluating a property and spotting red flags
- The bidding process - this is where you can lose or win a lot of money (way more than costs of an agent)
- Navigating the buying process
What an agent is not going to help you with?
- Finding you properties
Some tips for finding an agent:
- Talk to multiple agents before you choose one
- Avoid paying a deposit for their services - good agents know that they are going to find you an apartment and don't even ask for it
- You should pay an agent only once you buy a property
- Rules in the contract like “maximum number of visits” are a red flag
- If you don't fully trust a person, don't even think about working together
- Since makelaar is not a protected title, you should make sure an agent is registered as NVM makelaar (there’s another association too) - that will provide you a sort of quality guarantee and a formal means to complain as well as set standards that are the same with all of them
Tip: If you are viewing properties without an agent, talk to a seller agent. The vast majority of them are bad or mediocre at best. Because of the market, they can make a good living with minimum effort. But you can find some hustlers here and there. You can “hire” them on spot (but obviously not for the property you are viewing).
I actually have one more tip: If you don't have an agent, you like the property during the viewing and you are considering bidding, ask the seller agent to recommend you someone.
They will always recommend you a friend what means the chance you are going to win that bid is way higher (they share with info about how many people are bidding, what is the highest bid, etc.) You can eventually negotiate a better agent fee if you agree that you are contracting her for just this one bid.
Update from Reddit - apparently you can find agents that can give you access to properties before they come to the market:
Which area to search? Playing with the location data
As an expat in Amsterdam you probably don't have a comprehensive knowledge of all the neighbourhoods in Amsterdam. You might have a couple of areas that you like and some of them are probably out of your budget.
This might be a good way to start nailing down a list of areas but I really recommend to invest more time and look at data. I love playing with neighborhood data. One of my side projects is a tool for comparing neighborhoods in Lisbon. I might replicate it for Amsterdam one day...
City of Amsterdam offers an interactive map with all neighborhoods. You have to switch the view to “Quarter” as these are the neighborhoods that Funda recognizes.
Once you have a list of all the neighborhoods you are considering, you can create a filter on Funda and set up email notifications.
Real estate prices
On this heat map you can see how much you are going pay in average for a square meter. Is it a surprise for you that Nord, West and Bijlmer are the cheapest areas? Probably not. This map is more useful once you zoom in.
Public transportation
Do you want to live close the public transportation? I found it useful to be in max 10 min walking distance from the metro station, trams were not so important as they are slow. Train station would be a huge bonus. This transportation map was handy.
Noise and the quality of air
Noise can be a really an issue that many people don't consider. This noise map is created based only on the traffic data (it doesn't track drunk tourists). I recommend to visit the place where you’d like to buy at least once during the day and again in the evening.
Not a surprise that the level of noise often correlates with the quality of air (if the noise is created by transportation). Maybe you don't care about the noise but you should definitely care about the air quality.
Safety
Who doesn't want to live in a safe neighbourhood? As the safety of the neighbourhood correlates with the property prices, there is a higher chance that you’re going to score a good deal in a bad neighborhood.
I really recommend reading “What It’s Like Living in a Bad Neighborhood” where Tynan presents some interesting arguments for buying a property in a bad neighbourhood.
Amsterdam is a VERY safe city to live in. Safety of the neighborhood is usually calculated by a petty crime (e.g. stolen bikes). Even in the worst neighbourhoods, you are not going to experience armed robbery and so.
Type of residents
We have been living in Oost for 2 years after moving to Amsterdam and we absolutely love it! When considering an area to live in, we were sure that we wanted a mix of Dutch, Westerners and Non-Westerners (this is how the City of Amsterdam defines residents and yes, the categorization is a bit racist).
Useful tools:
- Chrome extension for Funda - show neighborhood data on any Funda listing
- Radar map (a tool made by City of Amsterdam) - you click on the map and it shows you all available location data in the perimeter
House criteria
Buying a house is always full of compromises unless you have an unlimited budget. If you don't want to compromise, you might end up like those people who say “Amsterdam real estate market is crazy, we have been looking for an apartment to buy for 3 years”.
We basically wrote a list of our “must-have” and “nice-to-have” criteria.
The “must-have” list consisted of things we didn't want to compromise on:
- Specific neighborhoods (we had a list)
- Max. total price
- Number of bedrooms
- Min. number of m2
- No heavy reconstruction (e.g. new bathroom/kitchen) needed
- Max. walking distance to metro and nice park
The “nice to have” list consisted of things we were willing to compromise on:
- Nice garden/balcony/terrace
- Certain house amenities (e.g. bathtub)
- Condition of the building (e.g. pipes changed)
We significantly adjusted the must-have criteria after seeing the first few apartments.
Searching for leads a.k.a. monopoly of Funda
If you’ve already looked around, you’ve probably heard of Funda.nl. It's a listing website that basically has the monopoly on the Dutch market.
The Funda website has about 35 million visits every single month. Nobody knows how many of these visitors are serious buyers —probably not many.
The website looks outdated and very basic compared to similar house marketplaces in other countries, especially when you come from the US and are used to Zillow.
Funda is majority-owned by NVM, trade association representing approximately 60% of estate agents in the Netherlands. They agreed on a rule that owners can’t list their property on Funda without an agent.
So if you want to sell your property, there is only this website where you can list it and you need to do it through an agent that charges you 1% of the sale price + some bonuses.
Doesn't sound like a healthy market 😬
As Funda has the monopoly, all buyers have basically the same starting line and agents benefit from it. You must think that there must be a way to find properties before they are listed on Funda.
Good deals nobody else know about… Time for another meme:
Well, imagine you are a seller and you know that all the buyers are refreshing daily funda.nl to see new properties. It wouldn’t be very wise to you sell without publishing it there, right?
As there is only one website to search all new properties on the market, don't expect your agent to bother finding you leads. YOU have to find apartments you like, schedule a visit and then sync with your agent to be present there for the viewing.
On Funda you have 2 options to schedule a viewing:
- Contact form (online appointment)
- Call the agent
Always call. Not only because the best properties have all slots booked very quickly but also you are way more flexible over the phone to convince them to find an available slot.
You must be fast. We always called the same day and it happened very often that we were not able to book a slot. Once we called 10:30am to schedule a viewing of an apartment that was published the same morning. We were #10 on the waiting list and there were 69 people scheduled for the viewing. Bull market.
One could argue that what's the point of visiting a property that has already so many people interested. You can still win a bid for these popular properties but as the first step you need to get the slot for the viewing 😉
There is one exception for the advice "Always call": when the listing is published during the weekend and you are calling on Monday morning, all the slots might be booked by online appointments. This can sometimes happen even during the weekday if the listing is published in the evening.
Funda is so popular that people create unique social media accounts like @fundamakeover on Instagram where you can see the listed and actual selling price of flipped houses.
Apartment evaluation - what to be careful about
Let's say you found an apartment that fits your criteria and now you want to dig deeper.
Here are four things I always looked at:
#1 Ground lease (erfpacht)
Most of the ground under the houses in Amsterdam is owned by the city hall. What means you have to pay the lease.
Very often you see that the lease is paid until some date in the future (can be 30 years from now) and how much you have to pay afterwards. It depends when terms were negotiated with the municipality and the differences can be huge.
If the ground lease has not been paid in advance for x years, you need to pay a yearly price called canon. This is a % of the value of the land that is leased. And this can be thousands a year. The gemeente uses an example of value of the land (so without building) of 100.000€ x % 5% = 5.000€ a year. So this is 416,67€ a month extra on top of the mortgage. A part of it is tax detuctable (inkomstenbelasting), but still a chunk is your own money you have to lie down for it.
Sometimes the ground is already owned by the seller and that's a win because you can avoid a lot of headaches—it’s hard to find those. You can also ask the municipality and buy the ground later. There is quite a complex formula to calculate the price and you must make a decision if it’s going to make a sense for you or you rather pay a lease.
Sometimes the ground is owned by a private person or company. This is a clear pass on the property because this lease is not regulated and you basically have to pay whatever they ask for.
Learn more about ground lease on this site.
#2 VvE
VvE is short for Vereniging van Eigenaren which means Apartment owners' association. You pay them every month a fee that is saved in a fund. That fund is used for renovations of the building and management of the fund.
Funda listings always mention how much you have to pay per month to VvE. Fees that are either very high or very low are red flags. A very low fee is appealing but also means that the association is not saving enough to the fund and owners might end up in a few years paying the renovation of the roof from their own pockets.
Very high fees are also suspicious and can uncover some problems with the building.
I recommend asking how many members are in the VvE. If there are 100 owners in a poorer area and your windows need to be replaced with double-glazing, you might end up waiting for years because the VvE only sanction urgent renovations.
VvE can also regulate the conditions of renting apartments or parking lots, but that's for a separate article.
What you can also ask the agent:
- What is the plan of VvE for renovations
- How much the VvE has saved in the fund
#3 Foundation of the building
As you may know, Amsterdam is basically built on water. Which means that all buildings are standing on pillars.
Until 20th century, all these pillars were made from wood. And with moving levels of underground water, that wood becomes distorted after a few decades.
Concrete was used for pillars after 1925 but that concrete wasn't the same quality as it is today. City of Amsterdam has 4 codes that indicate the quality of pillars:
- Code 1: the quality is good. This is rare in foundations from before 1925.
- Code 2: the quality is sufficient. The foundation will not require maintenance in the next 25 years. Minimal damage can be expected within that time.
- Code 3: the quality is substandard. Minor damage can be expected within 10 to 15 years.
- Code 4: the quality is insufficient. You will need to repair or replace the foundations immediately.
The problem is, that very often the information is not available for the property you would like to buy. Be careful about the foundations if you are buying an apartment in an old building. Sometimes agents know about the foundation info of the properties that are nearby and were build the same year. Always good to ask.
#4 Social housing
Amsterdam has a lot of social housing. Always ask if there is social housing in the building you want to buy as well as in the surrounding buildings. This influences the price of the property. But don't expect the seller agent to be very resourceful about this topic.
Before placing a bid I used to bike to the area in the evening, have a walk around and then ask a random neighbour “How do you like living here? I'm considering to buy a flat in this building”.
With a few follow-up questions, you might get more insights than you would from an agent 😉
Valuation and bidding
The price listed on Funda is usually lower than the real price. That helps seller to trigger bidding wars. If you are considering to place a bid, your agent might be helpful and give you historic data about properties sold in that area.
You can do the same by yourself, here are 3 tools I found useful:
Our first bids before we had an agent were 0-5000€ over the asking price. It was a waste of time and I learned that this is how most people “start”.
Realistically, if you want to win an apartment that doesn't have any major red flags, you have to place a bid of minimum 10-15% above the asking price. If the valuation makes sense, of course.
This applies to the middle price range. If you’re buying a property for 1M+ then the game is different; fewer buyers might leave room for a negotiation.
How to increase your chance to win a bid:
- Have an agent - buyers without an agent are generally less serious, many seller agents disqualify them automatically (they will never tell you)
- Have a written statement from your mortgage advisor - many people place a bid without knowing if they can actually get a mortgage
- Not asking for an inspection - you can ask in advance for inspection of the apartment after you win the bid (you are probably going to be disqualified without knowing about it)
- Apartments that need renovation - apartments that look like Airbnb Plus will have a lot of bidders, most people don't want to bother with renovation (who does?)
- Any requirements that filter buyers - examples: property available in 6 months to move in, you must buy a parking lot even you don't need it, arrogant seller agent, etc.
Avoid bidding wars
So you found a property that you love, you’re planning to place a serious bid and it looks like you’re not alone. You have been “on the hunt” for a half year and you are dedicated to winning the bid.
Congrats, you are a perfect candidate for overpaying tons of money in the bidding war.
Let's give you a brief explanation of how the seller agents are paid. They just get 1 percent on the total purchase price and can get another 10 percent on what is above the asking price.
So if the asking price is 500.000€ and they are able to boost bidding price by 15% to 575.000€, it means that they can take home 12.500€ (500.000€ x 1% + 75.000€ x 10%).
And that's a lot of dip to share with “friends”. So the seller agent, along with your agent, can play a game to manipulate you and convince you to pay a much higher price than you should. Then they can share the dip. As this would be illegal, they rather save this as a favour for the future, when they will be in the opposite positions.
Try an agent you can trust and stick to the valuations, this is all the advice I can give you.
Can you afford it?
Don’t forget that there are some additional costs to the property price:
- Tax
- Mortgage advisor
- Agent
- Notary
- Valuator
- Bank guarantee fees
- Other bank fees
- Etc.
This can be about 5% on top of the buying price.
If you overbid the property, you agreed to pay more than the real value of the property. That real value will be calculated by the valuator. The bank is going to approve you a mortgage only up to the price from the valuator.
Example:
Property has an asking price 500.000€ and you won the bid with 575.000€. The valuator calculates the value of the property 550.000€. That means that you have to pay the difference 25k out of your pocket. With all costs (mentioned above) you need to have at least 50k in cash even if you take 100% mortgage.
And don't forget about the ground lease costs and renovations (if needed, they can be very expensive).
Mortgage
I assume that you are buying the property with a mortgage. If not, you can skip this part.
Finding a mortgage advisor before you start bidding is highly recommended because having one significantly increases your chance of winning the bid. Getting the actual mortgage requires the valuation report which you can only get once you’ve won a bid on a property.
What documents you need to obtain a mortgage:
- ID or passport
- Payslip
- "Payslip" generated from the records of the UWV (Employment Insurance Agency) - easy to get with DigiID
- Employers' statement form (slightly deviating employers' statements are a major source of discussion with banks and consequent delay of your application) - easy to get it from your HR
There are 3 ways to obtain a mortgage:
#1 Bank
The worst option in my opinion and the first one we tried. Had a call with a sleepy clerk from a major bank giving me limited options and asking fees for it. I considered contacting the bank directly to be a good option because I ‘d be avoiding the fees. Not true.
#2 Hypotheker
Another option is to work with a mainstream agency like Hypotheker that has very standardized process and partnerships with some banks. The fees were a bit higher than the bank.
#3 Independent advisor
Slightly higher fees as Hypotheker and no affiliation to any bank. I had a feeling that we are getting advice from a truly independent advisor.
From my observation, most people are extremely focused on searching for the apartment, they win a bid and then they drop the ball. Choosing the right mortgage can make overall way bigger total price difference over time than scoring a good property deal.
Don't focus only on the interest rate, downpayment and monthly payment amount. These are important, of course.
But learn also about:
- The difference between annuity and linear
- Automated valuation
- Penalties to pay in advance
- Fixation of the interest
It all depends on your “strategy”. Do you want to re-sell in 5 years or hold for 30 years?
You don't fully control your property
Owning a property in Amsterdam is like having a company with co-founders. You have to discuss important decisions with them.
So who are your “co-founders”?
#1 The government
You have to pay 2% tax when you buy a property that is going to be your main residence. There are some exceptions if you are under 35 and buy a property under 400k. If you buy a property as an investment (i.e. you’re not going to live there), you have to pay 8% tax and then you’ll probably need to pay a yearly wealth tax calculated from the value of this investment property.
#2 VvE
The association of owners can have a full book of rules on what you can and can't do with your property. What might be important for you is renting. Airbnb is probably banned by VvE (you can do it in Amsterdam in a limited way even if you follow the rules). They can also regulate how you can rent your apartment or parking lot long term.
#3 City of Amsterdam
You are probably going to pay the ground lease to the city hall. You can also negotiate buying the ground with them. Renting out your apartment on Airbnb is also something you should discuss with the city hall.
#4 Bank
Interest rates in the Netherlands are fantastic right now and that's one of the reasons why the market is so hot. But those interest rates are for properties that are used as the main residence. If you decide after a couple of years to rent your property, you are obliged to tell it to your bank. They will then recalculate your interest rate (expect higher, obviously).
Why did I write this article as I'm not selling you anything?
I tried to read everything possible about buying a property in Amsterdam. Not much good content online...
Two articles I found interesting as they were about using data science.
But I couldn't find a really deep overview of the whole buying process. So I decide to write it by myself, this is the first reason.
The second reason is a bit more selfish. As you can see, this buying process in Amsterdam is completely broken. I'm interested in exploring ideas on how to fix some parts of this process with technology. I honestly don’t believe that in 15 years the job of the agent as we know now will exist.
Feel free to reach out to me if you have some tech ideas/solutions to brainstorm.
PS: There are many more insights in the discussions on Reddit or Facebook.
