The differentiation-monster and real estate transfer tax
In the weekend before Christmas I learned of the existence of the Brexit-monster in the satirical show Even tot hier.
Undoubtedly conceived by a communication ‘expert’ to confront entrepreneurs with the dangerous consequences of Brexit (even though most entrepreneurs had – like me – never heard of this monster). The Hague however created a far more dangerous monster, the differentiation-monster (Wet differentiatie overdrachtsbelasting, Stb. 2020, 545). As of 2021 the 2%-rate for real estate transfer tax can only be utilised by physical persons that use the dwelling other than temporary as their main residence. Starters (physical persons aged 18 up to 35) can apply a one-time exemption.
Why the differentiation-monster? For several reasons. Most importantly, this new legislation will not at all achieve its goal, as is consensus between real estate professionals. Yes, investing will become more costly, but as long as major investors can realise gross initial yields of, say, 4% and leaving the money on the bank even costs money, investing in real estate remains attractive. Furthermore this legislation is administratively burdensome for the notary practice, probably leading to increased notary costs. And there will be even more discussion about the application of the 2% rate for e.g. dwellings that will be demolished and where the newly realised dwelling will subsequently be inhabited. Last, we should realise that there is nothing wrong with renting, saving and eventually buying a dwelling. In short I only see one solution: the Brexit-monster and the differentiation-monster move to Sesame Street, where they will undoubtedly live in peace with Cookie Monster.