PERMISSION TO RENT
Do you have the correct permissions to rent your property?
First step is to gain permission from all relevant parties before renting out your property. This usually means:
Your bank or mortgage lender. If you have a mortgage, your mortgage agreement will most likely include a clause requiring written permission before renting out your property
VvE. You should inform your VvE / Association of Owners about the intent to rent your property. The VvE could have rules the tenant needs to be made aware of
Co-owners. All owners must approve. For example, if a couple owns the property, both partners would need to approve
We don’t check if you obtain the correct permissions. We only require you to confirm you have permission. We do help with meeting any required conditions such as adding articles to lease contract and sharing VVE rules with the tenant.
INDEFINITE OF FIXED RENTAL PERIOD
How long would you like to rent your property?
Prior to July 2016, lease agreements were generally for an indefinite period due to tenant protection law. From July 2016 onwards, the law was adjusted to allow rental periods of up to a maximum 2 years. This can be desirable to provide future flexibility as a property owner.
When using a maximum 2 year lease you also need to follow certain guidelines such as:
- The tenant must be provided with written notice informing the end date of the lease agreement. This must be no earlier than 3 months and no later than 1 month before the end date. If you forget to send this notice, the lease will become indefinite so its important to be on top of this!
- Extending a lease agreement for a definite period is not possible. When extended, the lease by operation of law automatically changes into a lease with an indefinite term. Example: if a lease for 1 year is concluded and it is then extended by another year, the lease by operation of law automatically changes into a lease for an indefinite term, in which the lessee has full tenancy protection
- Minimum rental periods are not possible when using this lease and the lessee always has the possibility to give a 1 month notice of termination. This is a disadvantage to the fixed lease agreement when compared to an indefinite lease. With indefinite, you can determine a minimum rental period
- The lessee still has the option of having the rent assessment committee assess whether the rent is too high. In this lease model, the lessee must do this within 6 months after the end of the lease. If the dwelling is worth 146 points or more, it is decontrolled and in the ‘vrije sector’. If so, the rent assessment committee will leave the rent price as is. If the dwelling is worth less than 146 points, the rent assessment committee will determine the rent price at the statutory maximum for the number of points of the dwelling. The rent assessment committee will do this with retroactive effect back to the start of the lease
Please note any lease pre-July 2016 will be unaffected by the new law. The max 2 year lease only applies to the lease agreements dated after July 2016. Additionally, the lease agreement must be properly worded with relevant articles to ensure of it’s temporary nature.
Another option for temporary rental is the use of Leegstandwet / vacancy law. With this rule you can rent with a different kind of permission without the interference of the Housing Evaluation System. More info on both Leegstandwet and the Housing Evaluation System can be found here:
TAX ON RENT
How much tax should you pay on the rent?
The Dutch tax system has various boxes. For most property owners, either Box 1 or Box 3 applies:
- Box 1 is Income from employment and benefits and taxed at progressive rates
- Box 3 is income from savings and investment. A tax-free allowance of €30.000,- for single persons and €60.000,- for fiscal partners is applied (2018).
When you temporarily rent out a property considered to be your main residence you would be subject to a progressive rate of Box 1 on 70% of your rental income. From this you can deduct costs connected to renting the property such as agent’s fees, marketing costs and cleaning fees. Deductions from your mortgage interest (hypotheekrenteaftrek) can also be claimed.
When you rent out a property not considered to be your main residence, this is considered savings and investments and therefore goes to Box 3. Deductions from your mortgage interest cannot be claimed.
Taxation on income from Box 3 is based on the assumption that people will have a certain taxable return on their net capital. The actual level of return, for example interest, dividend, capital gains or losses, is irrelevant. Net capital, the value of the assets minus any liability, is determined once per year on January 1. Only capital available for savings and investment is taken into account.
When in Box 3, you can use the WOZ value of your property to determine your assets and deduct your mortgage debt. You can then also deduct your tax free allowance but you must however add debt threshold. In 2018, the tax-free allowance is:
- €30.000,- for single persons
- €60.000,- for fiscal partners
The debt threshold for 2017:
- €3.000,- for single persons
- €6.000,- for fiscal partners
Take into account you can only deduct any debt above the threshold.
From 2001 to 2016, the percentage for fictitious profit was 4% with a tax rate of 30%. So until 2016 the tax to be paid was 4% * 30% = 1.2% of the taxable equity.
As of 2017, the percentage of the fictitious profit has changed to be divided over 3 different brackets. The more savings and investments you have, the higher the percentage can be.
A part of the assets is taxed based on a fictitious profit of 1.63% and a part (or all the assets if you fall in the 3rd bracket) is taxed based on a fictitious profit of 5.39%. Here you can find a table showing figures from 2018:
|Bracket||Your (share of) savings and investments||Percentage
|Percentage Investments 5.39%|
|1||Up to € 70.800||67%||33%|
|2||From € 70.800 to € 975.000||21%||79%|
|3||From € 975.000||0%||100%|
We intend to be as helpful as possible on this subject but different variables can effect your situation. Therefore please verify the consequences of renting out your property with your tax advisor.
INCLUSIVE OR EXCLUSIVE
Will you rent inclusive or exclusive of bills?
We always aim to have utilities in the tenant’s name but this can be difficult for companies and expats. Companies prefer to pay one amount due to invoicing systems and expats need to show a total amount covered by their employer’s housing allowance. On top of this, most expats don’t speak Dutch so dealing with utility companies can be complicated.
With this in mind, tenants can also make a case at the Huurcommissie if the rent is all-inclusive without specification of the included costs. Therefore the most secure method of rental is to avoid an all-inclusive total rental price.
In the situation of a rent including costs, the price should be split showing each amount within the total rent as a prepayment. So before renting, you should determine the breakdown of individual costs for basic rent, gas, water, electricity, TV, internet, service costs (VVE), furniture rental and any other amounts such as cleaning costs etc.
With split costs, you can also adjust the prepayment for supplies and services whenever they become higher or lower during rental. For example, heating costs can increase due to usage or service costs for the building could increase. In both cases the tenant would pay the difference. You should also note the landlord would need to provide refund if bills become less just like the energy provider would.
In any case, part of our service is to make sure utilities are set up in the correct person’s name whether inclusive or exclusive. We also take care of any calculations when it comes to included amounts.
FURNISHED OR UNFURNISHED
Will you rent with or without furniture?
Most expats search for a fully furnished rental. This is usually because their stay in The Netherlands is temporary for periods of one to two years. As you can imagine, buying or transporting furniture would be impractical.
When fully furnished, the property is best equipped at a level where the tenant only needs to bring a suitcase. Expats would hope everything else is already present.
We do also help find tenants for unfurnished properties. Just take into account the demand is less and therefore could take longer. If you prefer, we can help in furnishing the property. We usually can take care of this while maintaining a good rate of investment.
Do you have the correct insurances?
Insurance is often overlooked when preparing for rental. You would be wise to check with your insurer if any possible liabilities won’t be covered when renting out a property. Possible insurance coverage includes:
Not to be confused with contents insurance, inventory insurance is specific to renting furnished properties. Probably your current contents insurance will be void when renting out your property however converting to inventory insurance should be an option.
Possibly home insurance is already set up if the building has a VVE. Sometimes a rental clause is included within home insurance making home insurance valid when you rent out a property. Best to check if in doubt.
This provides coverage for immovable interior goods such as the kitchen or bathroom floor. Maybe you have a new built in kitchen and bathroom, you will probably want that to be insured.
Coverage includes any accidental damage to tenant’s belongings. Maybe a water pipe bursts and destroys the tenant’s laptop. You can have an insurance to cover that.
Legal expenses insurance
Covers any necessary legal aid in connection to the rental. Legal fees due to disputes would be covered for example.
Tenants should also take out their own insurance for items they bring to the property although this is their responsibility to arrange.
Does your property need a housing permit?
In Amsterdam smaller, less luxury accommodation falls under housing regulation. In this case the tenant needs to apply for a housing permit to legally live at the property. Failure to comply with this regulation can result in punishment such as a cease and desist order or a fine of up to €18.500,- for landlords and €340,- for tenants.
You can find more info on the subject here (in Dutch):
We also help for application and finding the correct tenant in this situation.
We also recommend checking both our energy label & point system pages for further considerations when renting out your property.
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Frequently asked questions