Dutch mortgage rules to tighten for homes at risk of foundation damage

Banks will be required to consider potential foundation problems when issuing mortgages covered by the National Mortgage Guarantee (NHG) from next year. This could reduce the amount buyers are able to borrow for homes with foundation-related risks.

The NHG provides protection for homebuyers who run into financial difficulties in exchange for a one-time fee, and lenders often offer lower interest rates on mortgages covered by the scheme. NHG wants to prevent homeowners from facing financial hardship if they are suddenly hit with substantial foundation repair costs.

From 2027, lenders will be required to use a standardized method to assess foundation risks for applicants seeking an NHG-backed mortgage. If a property is considered at high risk, lenders must account for potential repair costs when determining how much the buyer can borrow.

Several organizations have warned in recent years about the growing problem of damaged foundations, which can be caused by drought, falling groundwater levels, or construction work.

Two years ago, the Council for the Environment and Infrastructure estimated that the total cost could reach €54 billion if the problem is left unaddressed. In April, the Dutch Authority for the Financial Markets (AFM) said nearly 220,000 homes belonging to around 120,000 owners face a high risk of foundation damage. Most of those owners would not be able to cover the repair costs upfront.

NHG expects the new rules to help homebuyers better understand the potential financial impact of foundation problems. However, the organization says further action is needed, including clearer information and closer cooperation between national and local government and the financial sector.