The savings rate doesn't amount to much, so what to do with your money? More and more investors are moving toward the housing market. A second home, as a recreational property or to rent out, is gaining strong popularity.

Exact figures on exactly how many Dutch people own a second home are not available. But the sale of Dutch recreational homes is quite on the rise, according to figures from brokers association NVM.

In 2017, there was a plus of 15 percent. In addition to vacation parks, the coast of Zeeland and the Wadden Islands are especially popular. On the islands, a recreational home is not cheap: almost 350,000 euros on average. Also in Zeeland, especially homes in the higher segment are still for sale, observes the NVM. Half of the vacation homes for sale for 500,000 euros or more are in this province.

In the Netherlands, about one in ten houses is now sold as an investment property, as much as one in five in large cities, observes ING economist Mirjam Bani. "That number has been increasing for years. Especially in college towns, it is popular to have a second home that you rent out. Of course, that can be very lucrative."

You can invest your excess value in a second home, or take out your own mortgage for it. However, most lenders will require that you also put in your own money. Also, you cannot deduct the interest.

Investment

A good investment? Leo Jacobs thinks so. Fifteen years ago he bought an apartment in Amsterdam's Indian neighborhood to rent out. "Back then you really had no-go-areas there, now it has become a kind of Valhalla. Initially my wife and I bought a little house for our old age, but when we saw how easily we found tenants, we immediately bought a second one. Later we bought a third. Now it is my source of income. I enjoyed renovating them and finding tenants in Amsterdam is never a problem. Whether it's still such a good investment now, I don't know. House prices have gone up a lot, though."

There is also increasing interest in a cottage abroad, observes Rob Smulders of Mondi, an organization that helps Dutch people with everything involved in a second home. "For four years there has been growth, the last year really explosive," he says.

The Dutch mainly watch France and Spain, with Italy, Portugal and Austria following. In 2005 Turkey was still the most popular place, but after that it declined. In recent years, more Dutch people want to sell their Turkish property than are still interested in it, Smulders observes.

Savings

Unlike the Netherlands, you do not pay capital gains tax on a second home abroad. A second home in the Netherlands, like savings, falls into box 3, which means tax must be paid on the value. For a house abroad, you are largely exempt from this. However, you do have to deal with local taxes that differ from country to country, explains tax advisor Harjit Singh.

"It can be very lucrative."

That a second home abroad is only for the super-rich is debunked by RTL series Our Italian Dream: Ollolai. Here, Dutch couples are followed who have purchased a ruin in Sardinia for a euro.

"Since Ollolai has been on television, we get calls every day asking about opportunities to buy a second home somewhere cheap," says Vincent Peek, organizer of the Second Home Fair that starts today and lasts until Sunday. "We don't have one-euro houses, but a second home is often a lot more affordable than people think." Between seven and eight thousand visitors are expected at the fair this weekend.

Ronald de Rooy of Italycasa, which helps Dutch people buy a second home in the land of pizza and pasta, warns compatriots who want to go after the Ollolai'ers. "The price level in Italy is quite similar to that of the Netherlands. There are a few regions where you can buy a house for a trifle, but if you want to be near an airport and the sea, you have to think at least a ton or a half for a modest little house."

Cheap

Rob Smulders does caution against very cheap foreign houses. "If something seems too good to be true, it usually is. Always get an independent lawyer to verify the purchase agreement before signing. Maybe there is still a debt on the house, there is no residential permit at all or no permit for the addition or pool. In southern Europe, also under the influence of the EU, this is being enforced more and more strictly. Soon you will be left with a house that is completely unsellable because it is partially or completely illegal."

Investment property

According to Smulders, about one in five vacation homes is bought as an investment property. "Most people just want to vacation there themselves anyway or even live there semi-permanently. Don't forget that if you buy a second home to rent out, you can't really make it a home with your own stuff."

Taking out a special investment mortgage for a second home is possible, but not done very often, says Rabobank economist Nic Vrieselaar. "Usually such a house is bought from assets one already has. Because in terms of savings interest, you don't get anything for it anymore." Financing a second home with a mortgage is not entirely possible with most banks. You will have to bring in your own money. Also, you cannot deduct the interest and often a higher interest rate is charged. There are not as many lenders willing to finance second homes, says Oscar Noorlag of mortgage broker Van Bruggen. "It's a different type of home anyway, not as easy to sell. Also, you will really have to bring some of your own money."

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