Recently I was visiting someone. The conversation turned to transfer tax. Someone said it was a good thing that transfer tax for investors had gone up to 8%. Finally a chance for first-time buyers. I see it very differently myself. I think it's an incredibly stupid rule. Towards the end of last year, you saw all the easily lettable flats being sold off quickly to investors. Prices went sky-high and first-time buyers no longer stood any chance at all. With completion in January or later, first-time buyers could suddenly bid 2% more. And they did so en masse. So homes suddenly became even more expensive. This rule was only really nice for the sellers. For most homes, about 90% of the viewers were private investors. And you know, I do understand that….
Contents
- The investor isn't a bully, but your neighbour or that young guy from work
- What is the real problem?
- Changes to transfer tax for investors & first-time buyers
- Shortage of homes
- The solution
The investor isn't a bully, but your neighbour or that young guy from work
As a first-time buyer I was mega frustrated with investors, and I still feel enormously for first-time buyers. But you hear very few people talking about where it really goes wrong. Many private investors really aren't bullies. They're not just men with Rolexes and suede shoes. Many investors have children of their own who are first-time buyers, and they are very often women too. But what we also see very often are very young guys and girls. They bought their first home two or three years ago. Many property investors don't live in mansions at all, but just in an average house or a flat. Often they don't actually want to invest in property that much, but they are very afraid of seeing the wealth they've worked so hard for evaporate.
What is the real problem?
We are dealing with inflation. We are dealing with wealth tax (vermogensrendementsheffing). We are dealing with uncertain pensions. On top of that, interest rates are very low and their homes have risen enormously in value. If we in the Netherlands just dutifully save, putting something aside for a rainy day, it costs us an incredible amount of money. Your money is worth less every year. There is a lot of uncertainty about pensions. People are taking matters into their own hands. They are going to secure their pension and their wealth. Investors want certainty, little risk and, at the moment, not even that much return. Property is popular; in the long term it will always rise. It's something tangible, you can drive past it. Corona is causing a lot of uncertainty. A lot of financial uncertainty. That makes people prefer to invest in bricks and mortar rather than on the stock market. People are looking for returns. Because of our government's regulation, investors are also leaving for other countries. Ireland, England, Denmark, Belgium and Germany are already very popular. On forums about investing in property you can already see people sharing information about this with each other. You know, it's an even bigger problem if investors leave the Netherlands. Because if investors with capital leave, we can forget about financing new homes. Then even less will be built. In the podcast by Sander Schimmelpenninck & Michiel de Gruyter you can already hear investment companies talking about investing abroad. It's precisely parties like these that dare to take the risk of investing in new complexes.
Changes to transfer tax for investors & first-time buyers
At the end of last year you saw a run on easily lettable properties. Investors wanted to take advantage of the 2% transfer tax while they still could. All the first-time buyers are frustrated! And rightly so. What madness in the housing market. You need quite a lot of your own money. Until 1 April 2021, as a first-time buyer under 35 you didn't have to pay any transfer tax. As a result, an enormous number of transactions were made by first-time buyers in the first 3 months of 2021. After 1 April 2021, as a first-time buyer you get a transfer tax advantage up to an amount of €400,000. Prices keep rising and by now many first-time buyers in Utrecht are already starting out with a home that costs more than this amount. In Utrecht and in Rotterdam you can see that more first-time buyers did indeed buy a home in 2021 and that the number of investors has fallen somewhat. But you also see that not all investors have pulled out because of the 8%. Because the problem remains. Only the return falls, and the tenant has to absorb that.
Source: Brianbay-NVM – buyer type Utrecht
Source: Brianbay-NVM – buyer type The Hague
Source: Brianbay-NVM – buyer type Rotterdam
Shortage of homes
In Utrecht alone, about 22,000 people are looking for a single-family home to buy. The total stock of owner-occupied single-family homes is about 29,000. About 11,000 people are looking for a flat to buy. The total stock is about 38,000 flats. In total there are 150,831 homes in Utrecht. Of these, 45% are owner-occupied, 33% belong to a housing association, 21% to a private landlord and 5%!!!!! are empty. At the moment, 44% of all homes are single-family homes and 56% are flats. So supply & demand don't quite match up either. This means single-family homes keep rising in price. Investors prefer to let flats. As a result, you also see that they can easily buy up flats, while private buyers are all fighting over the single-family homes at the same time.
The solution
Moaning, regulating and blaming everyone is easy. But it doesn't solve the problem. The Prins Bernhard tax certainly doesn't. Nor does raising transfer tax to 8%. Young people starting out will just end up coughing up the extra in their rent. Now you're thinking: well, come on then, what does work? I personally think that if you didn't have to pay wealth tax on your savings in the bank, many people would already feel less pressure to invest. Fortunately, this year the tax-free amount has already gone up to €50,000, and to €100,000 jointly with a partner. In addition, saving for your own pension needs to become more attractive tax-wise. Then the pressure to invest to cover shortfalls is less great. But hey, those rules haven't built a single extra home yet. Amsterdam apparently isn't keen on that either, building extra homes. My jaw dropped; this looked to me like a political game. If you keep construction going, the economy keeps going. They say they have to make savings because income has fallen due to corona. Many investors would love to help create extra homes, and want to contribute to sustainable homes & conversions. But these are often risky projects that require a few hundred thousand euros of their own capital. Gé has some really great investors; we could bring them together, and we could guide them in creating beautiful homes. That way more homes would be built. This is already possible, but the regulations are very complex. These regulations should be made easier for smaller investors. At the moment only the big players can carry out projects like this.
