I’m living in the Netherlands and paying €20,000 per annum in rent – which is a lot of money. As I was in a position to buy in Ireland prior to moving, I’m thinking that I will instead purchase an apartment here and sell when/if I move on.
I'm young, single and thinking that it makes sense to take advantage of lower interest rates and better mortgage availability here. I plan on staying here for at least another two to three years. When I do move home and start a family, I have the option of building on family land, so I might not even buy in Dublin.
I’m wondering if I do go ahead with the purchase here, will the negatives of losing first-time buyers benefits in Ireland outweigh the positives of equity and potential tax implications here?
Ms PW, email
Twenty thousand euro is a lot to be paying in rent though the friends you left behind in Dublin will, no doubt, tell you that it is no more expensive – and possibly cheaper – than what you would pay in Dublin.
The monthly average at the end of last year for a one-bed flat in Dublin was €1,650, according to UK insurance group CIA Landlord. Figures from Daft.ie suggest it could be noticeably higher in parts of the capital.
There’s a lot to be said for buying at current interest rates if you are in a position to do so – whether in Ireland or in the Netherlands. And that might be easier in the Netherlands.
Property prices, especially in Amsterdam, seem relatively similar to Dublin, with one-bed apartments going for €410,000-€615,000 in the city centre and €280,000-€420,000 on the outskirts, depending on size. The average apartment size is apparently just under 50 sq m (528 sq ft) which is smaller than average apartment sizes in Dublin.
A report from Rabobank forecasts property price growth of 12.5 per cent in the Netherlands this year after a jump of almost 15 per cent last year, though they signal more modest gains from 2023.
Mortgage lending rules in the Netherlands are not as stringent as they are in Ireland. It appears you can borrow up to five times your gross salary as a single person and you can also secure a mortgage for up to 100 per cent of the property purchase price though, more likely, you will be expected to provide a 10 per cent deposit as in Ireland.
Mortgage interest rates are also, on average, lower than here, with rates available from about 1.5 per cent, although the interest rate will be determined by the amount you borrow as a proportion of the value of the apartment and also the term if you are fixing.
Like Ireland, interest rates are at historic lows but you need to be aware that rates are likely to rise over the next couple of years – even without the Ukraine factor.
There are additional costs in purchasing, as in Ireland, which you’ll need to fund but some of these are tax deductible, I gather – as is mortgage interest for owner occupiers. There is also a property transfer tax – equivalent to our stamp duty really – which is levied at 2 per cent on the property value on home purchases, as well as a recurring property tax which is similar to our local property tax.
So now the downside. If you buy anywhere, including in the Netherlands, you will no longer be able to claim first-time buyer status should you subsequently return home and look for a home loan here.
But, in practical terms, what does that mean? Well, it means that you will be limited to a loan of 80 per cent or less of the value of the property you buy or build here – as against the 90 per cent loan available to first-time buyers.
You will also not be able to avail of Help-to-Buy relief which is aimed specifically at first-time buyers, assuming it is still available when you return. It currently allows you claim up to 10 per cent of income tax and DIRT paid by you in the previous four years up to a maximum of €30,000.
Of course, as you’ll have been abroad for the four years, Help-to-Buy might not be relevant anyway. You would first have to pay the tax and then claim it back so your benefit would be limited by the amount of tax paid after you return – even if Help-to-Buy is still available at that time.
Equally, any other measures put in place by this or future governments to help first-time buyers will be closed to you.
You also want to be sure you can sell when you need to but, certainly for now, Netherlands seems to be a seller’s market.
If you are comfortable that you could have afforded to buy in Dublin before you left and are staying in the Netherlands long enough to build up equity in the apartment there – through repayments and rising property prices – it probably makes sense to buy. Certainly owning a home in the Netherlands is, like Ireland, currently cheaper than renting. However, that decision is very much one that only you can make.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to firstname.lastname@example.org. This column is a reader service and is not intended to replace professional advice