First-time buyers not benefiting from higher transfer tax for investors

First-time home buyers are not benefiting from the 2021 increase in transfer tax, according to an analysis by the realtors’ association NVM. The government hoped to deter investors from affordable homes by raising the transfer tax from 2 to 8 percent. But the higher tax only deters investors from pricier homes that are generally already out of reach for first-time buyers.

Despite the increase in transfer tax in 2021, investors’ market share increased for cheaper homes. In 2021, 12.3 percent of home buyers in the 100,000 euros to 300,000 euros price range were investors, 1.5 percent higher than in 2019 before the measure was announced. Investors’ market share also increased slightly in the 300,000 euros to 400,000 euros price range.

“As a result, the benefit of the measure has mostly accrued to those moving from one owner-occupied home to the next. The aim of reducing investor competition for first-time buyers was not achieved with this tax measure,” the NVM said in a press release.

This year, the government increased the transfer tax to 10.4 percent. The NVM couldn’t say anything specific about the effect of this measure, as it coincided with other measures like purchase protection, regulation of the mid-market rent, and adjustment to taxes in box 3.

According to the realtors, purchase protection has so far been the most effective measure to keep investors out of the housing market. In municipalities where the measure has been introduced, investors’ share among buyers has fallen considerably, while first-time buyers’ share increased.

The NVM also warned that while the measures against residential investments may benefit first-time buyers, it is also shrinking the rental housing stock. “The private rental sector makes an important contribution to the functioning of the Dutch housing market,” said Lana Gerssen of the NVM. “Think of first-time buyers or students who don’t know yet where they will work and want to live in the coming years. It also affects people getting divorced, expats, or buyers of newly built homes who have to bridge a period.”