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I have left the Netherlands and rented out my Dutch house. Now the mortgage provider is creating problems.

I have a mortgage on a house which I have rented to students. I have now been informed by the bank that the property cannot be rented out & have been told that they need to be out by January. is this normal practice? I no longer live in Holland and would like to know what the options are if any.
Your house acts as a security for the mortgage. This means that if you stop paying the mortgage, the bank has the right to sell the house to pay off the mortgage instead. This is the reason why the bank wants to make sure that the value of the property stays as high as possible.
As a consequence a bank will state in the mortgage contract what you are and what you are not allowed to do with the property during the contract. One of the statements in the contract is generally that it is not allowed to rent out the property, certainly not if you leave the country. If the bank will approve that the property is rented out they can request additional measurements like:
- require that the mortgage is paid off in a shorter period, meaning that the monthly repayments go up,
- require that the rent you charge is above a certain amount.
Why would the bank believe that the value of the property is affected?
If you are not living in the property yourself the bank assumes that the property is less taken care of. Certain problems may not be fixed, the house may be used for other purposes etc. Especially if the house is used by several students one can imagine that the property is not in optimal shape. Because of this the value may be affected in case the house needs to be sold.
Besides that the tenant is protected under Dutch law. This means that it can be difficult to just end a rental agreement. Besides that there is statement which says that "sale doesn't break rent", which means that if the property is sold, the rental agreement doesn't end (automatically). The buyer will have to respect the rental agreement. For most possible buyers it will therefore be less interesting to buy your house, leading to a much lower value.
The bank just wants to sell the house as quickly as possible for the highest price. This is not possible if it has to be sold including the students.
For some reason the bank has found out that you left the Netherlands and rent out the property. Because of this they contacted you to order you to end the rental agreement on short notice. There is no discussion possible anymore, which could have been possible of you discussed your plans with them upfront. Now you are in a difficult situation, especially if it turns out that you can't end the rental agreements, unless by paying a compensation to each student. It is therefore important that all consequences are clear before the date of emigration.
So what are your options?
Contact your bank to see if you can arrange anything. Chances are not high, but you never now. Check the rental agreements to see if you can end the rent on such short notice. If not ask the bank if they want to give you some extra time, for example till the end of the study year in June. This way the students will have more time to find another place to live and can focus on their study in the mean time. But in the end we don't expect that the bank will allow you to rent the house out, especially if you are not coming back to the Netherlands shortly. In that case you may have to try to sell the property instead.
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Comments (15)
Comment by lizzyb124 on Thu, May 10th, 2012 at 8:26 PM
what happens if bank forces the owner to sell the property but its worth less than the original purchase price? say the property was originally bought for 100,000 but you sell it and only get 90,000 for it. as the owner is out of the country and doesn‘t have 10,000 to pay the bank, what would happen?
Comment by arjan enneman on Mon, May 14th, 2012 at 1:43 PM
if the purchase price is lower than the outstanding mortgage the owner will indeed be faced with a remaining debt. the owner will still owe this amount to the bank. the bank will keep chasing the owner for payment of the ? 10,000. so it doesn‘t disappear.
Comment by bjanh on Mon, May 21st, 2012 at 2:09 PM
Is there any way to legally wipe out the 10.000 debt remaining?
Comment by arjan ennemn on Mon, Jun 11th, 2012 at 2:26 PM
not really. unless the bank is willing to reduce the amount, which they will normally not do.
Comment by pepe55 on Wed, Jun 20th, 2012 at 10:37 PM
i am interested by this thread as we are in the similar/worse situation. in a few bullets:- we left the netherlands for family reason a few years ago- we always managed to rent out our appartment however, our interest rate went up and since that time the rent does not cover the monthly repayment- we have built an overdraft because of the latter- the bank does not know that we left- our interest-only mortgage is around 120% of the current value of the house (because of the current hit in the dutch property market)since our current situation is not sustainable, we are thinking of approaching our mortgage broker/financial advisor to try and renegociate some kind of agreement with the bank. however, when i read this thread, i wonder if it would be better to stay quiet - problem is that we might default on our repayment.
Comment by arjan enneman on Thu, Sep 27th, 2012 at 5:14 PM
house prices keep going down, so more people reach a situation whereby the outstanding mortgage is higher than the value of the property, a property which often can‘t be sold since there are no buyers. banks have a tough time too. they just want to make sure that they keep receiving their money back. question is always whether it is good to discuss your situation with the bank or not. do you want to give the bank a reason to cancel your mortgage or will you just meet that person who is willing to be flexible? difficult to say, especially in this period.
Comment by gg on Thu, Nov 7th, 2013 at 1:39 AM
pepe55 - i am in a similar position to you.. i wonder if you kept quiet or have you a solution.
Comment by Sam on Mon, Dec 28th, 2015 at 7:27 PM
Dear Sir, We (my wife & I) have bought a house in Amsterdam & stayed in the house for 2,5years. Thankfully the value has appreciated by some percentage. My wife & I would like to buy another bigger house since we have babies now. We have sufficient salary to get another mortgage + retain the old one. However, I understand we are not allowed to retain two houses. My questions is: Can we move to the new house & rent the previous one (we dont want to sell the old one since it is in a very good location & price). Alternatively can we buy another house & rent it out? BTWz my wife has already taken the Dutch nationality & we plan to stay over here for long term. Please provide your recommendations. Many Thanks in advance Regards, Sam D
Comment by Arjan Enneman on Wed, Jan 6th, 2016 at 4:24 PM
You can have as many houses as you wish. But you can only have one principle residence. So you can only claim the mortgage interest deduction for your principle residence, not for other properties. This would only be different if you buy a new property and put the old property for sale (and keep it unoccupied). In that case you can also deduct the mortgage interest for the property which is for sale. If you rent out the property you lose the mortgage interest deduction and you may have to discuss this with the mortgage provider first.
Comment by JC25 on Fri, May 27th, 2016 at 9:21 PM
Reading the stories above, I feel somewhat uneasy. I pay a mortgage on a small flat in the Netherlands and have recently just accepted a job in the U.K. I started to make preparations to rent out my place, with the assurance of a local makelaar that I would be fine as my flat has the correct number of ‘points‘ to allow me to rent out at whatever price I like, plus which the potential tenants would be short-term expats. But then I discovered a mortgagee is not actually allowed to do this. I‘ve since put things on hold and intend to take the U.K. job whilst leaving my property unoccupied, so I may come back at weekends if I wish. Does this mean I‘ll still get the mortgage interest deduction each new tax year? I know I‘ll lose out on a whole load of rental income, but I‘d rather have that than face the situation of the writers above.
Comment by Arjan Enneman on Fri, Jun 17th, 2016 at 11:42 AM
Option would be to discuss your plans with the mortgage provider and see whether they are willing to help you and be flexible. They may allow you to rent out your flat. Interest on a mortgage is only deductible if the property is your principle residence. Besides that a deduction will (only) make sense if you have taxable income (in the future) in the Netherlands.
Comment by Popo on Tue, Jun 21st, 2016 at 11:50 PM
Hi. My question is: at what percentage ownership the bank would allow you or would not care whether one rents his property and leaves the country? I understand that the bank is trying to prevent having to sell the house at a loss. However, if the market price of the house is obviously higher than the remaining mortgage (the actual loan), why would the bank not let one leave the country and rent the house?
Comment by Tanu on Wed, Jul 20th, 2016 at 2:24 PM
Hi, we have a mortgaged apt in Netherlands which is rented out, no problem there. Our bank only gave us permission for 2 years and might extend for 1 year. Says Dutch law only allows for 3 years. Are there ways around this? I would like to keep the apartment but need to rent it out in order to do so. Many thanks
Comment by Arjan Enneman on Tue, Aug 9th, 2016 at 3:26 PM
I am not familiar with a maximum period of 3 years for renting out your property. If your bank is not willing to extend the period any longer then you may have to sell the property or try to get another loan (which will incur costs). So first try to negotiate a longer period. The bank may want you to repay a larger part of the mortgage first. For specific advice or assistance you may want to seek the help of a mortgage advisor.
Comment by Arjan Enneman on Thu, Aug 11th, 2016 at 1:49 AM
@Popo: the property is 100% owned by you. The bank doesn‘t own anything, but their guarantee is that they are allowed to sell your property and use the money to pay off the mortgage if you would stop repaying the mortgage. Problem is that the bank doesn‘t look at the market value but at the execution value which is normally lower (around 90% of the market value). On top of that, if the property is rented out the value will be even lower. Problem is that the property will have to be sold including the rental contract. Sale of a property doesn‘t end the rent. And question is how interested possible buyers will be if they have to accept the existing rental contract. The higher the positive equity in the property the more flexible the bank may be though. But that differs per bank and possibly even per branch. Every situation is different and will be dealt with on an individual basis.
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