Dutch transfer tax kills deals by 50%

Experts have warned that the new transfer tax introduced into the Netherlands at the start of this year have led to a 50% reduction in residential deals.

The first six months of the year saw volume posted of €2.2bn in rental homes swapping hands, according to Utrecht-based company, Capital Value.

Compared to 2020, this tally is just half of what was seen a year ago when €4.77 bn was achieved.

The firm said the rise in transfer tax (subscribers can read more here), combined with less supply was the reason for the fall, not prices which have remained stable.

‘Over the first half of this year, pension funds were less active in selling their existing properties. This can be explained by the fact that pension funds sold a great deal in the final quarter of 2020 in anticipation of the increase in the transfer tax from 2% to 8%,’ explained the company.

‘The effect of the increase in the transfer tax appears to be negligible on prices in the higher segment. In recent transactions of residential portfolios, it was apparent that investors are willing to make offers at the same levels as in 2020. This can be attributed to the enormous amount of available capital, the low interest rate, the rise in the price of homes in the Netherlands, and the limited supply of existing residential portfolios.’

Pension funds
Developers were the largest sellers of rental homes over the first six months of this year with a 63% share of the total transaction volume. Pension funds remain the largest buyers of new-build output.

The percentage of institutional buyers in the total transaction volume skyrocketed to 52%, while this was only 43% in 2020. Increasingly more international pension funds are expressing interest in investing in Dutch rental homes.

Dutch institutional investors have for years played an important role in stimulating new-build output in the Netherlands.

It is expected that they will remain active in the acquisition of new rental homes during the second half of 2021. More transactions of newly-built rental homes will also be realised with foreign pension funds in the next six months. Homes in the mid-market rental segment are especially popular.

Marijn Snijders, director of Capital Value, said, ‘There is still a record amount of capital available for investment in new rental homes. In order to make maximum use of this capital, we must jointly ensure that there is sufficient suitable supply available in the near future. It is good news that the number of building permits is rising, however, the possible expansion of national legislation, the shortage of capacity in municipalities, and increasing construction costs can have negative consequences on supply. It is a missed opportunity if we don’t use this moment now to build more affordable rental homes and relieve the pressure on the housing market.’




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