The challenging housing market is leading to an unprecedented growth in buy-to-let investors. The price pressure resulting from the limited housing supply leads to quickly acquired capital gains and this is increasingly being invested in buy-to-let properties. With the growing number of buy-to-let names in the Netherlands, these investments are also becoming easier.
Owning an investment property has long been the privilege of a select group of high-net-worth individuals or professional investors. In recent years however, the buy-to-let investor profile has changed dramatically. According to a study published by De Hypotheker at the end of last year, 45% of the over-55s have made capital gains exceeding €100,000. With occupancy of rental properties almost guaranteed in the current housing market, this group is increasingly investing in buy-to-let properties where they may have previously opted for the so-called “open mortgage”.
This development is reflected in the rapid growth of the Dutch buy-to-let market. This market was estimated at around €65 billion in 2017 and has since grown to more than €75 billion, according to a recent trend report by Hyarchis. With an average annual growth of 5%, the buy-to-let market in the Netherlands is growing fast. About 6% of the total housing market is in the hands of buy-to-let investors and this share grows to almost 20% in the larger cities. The Netherlands is one of the most lucrative buy-to-let hotspots in Europe and this is illustrated by the continuous and successful emergence of buy-to-let specialists such as De Nederlandse, SolidBriQ and Nestr Smart Finance.
The buy-to-let names are aimed, without exception, at the professional real estate investor. Recently, these investors have begun to manage their rental mortgages with another newcomer, BCMGlobal. This servicer with Australian origins has laid claim to almost the entire Dutch buy-to-let market within two years. Gijs van Reeden, Managing Director Change & Technology at BCMGlobal says: “We succeeded in offering something that did not yet exist in the Netherlands for rental mortgages, namely a digital-only platform for mortgage acceptance. We do everything digitally and we are one of the first servicers that no longer works with physical documents at all. Unlike other mortgage servicers, our platform runs completely in the cloud and uses the latest technology, meaning it’s available 24/7. Such a flexible, on-demand platform is important for a market that is developing at lightning speed”.
When asked about the most important development in the buy-to-let market, Gijs van Reeden says: “The buy-to-let market is characterized by an increasing degree of specialization. In recent years, we have seen the rapid emergence of highly specialized niche names. A good example is Build Finance, which focuses exclusively on rented homes with a financing volume of two to ten million euros. In the coming years there will be more of these types of specialized names that, backed by a digital-only proposition, will quickly try to gain a large market share in underserved niches”.