You need to realise that THEY need to apply for their visas not you. And you need to address any invitation letter to them, not a consulate. Do not send the invitation letter to a consulate unless you're inviting the consulate staff to come visit you!
Your relatives will need to apply for a Schengen visa from their nearest Dutch embassy in the country in which they are legally resident. This is very important. And of course they will need to provide the normal documents when applying for a Schengen visa i.e.
* letters of employment, letters from college if applicable showing intent to return back to their country of origin
* proof of income such as bank statements and credit card statements
* Proof of travel such as tickets, hotel accomodation bookings etc. The letter of invitation is only needed if they will be staying with you and not in an hotel.
* Proof of travel insurance
I have heard that I will need to apply in the British Consulate in Netherlands for that.
The British Consulate in the Netherlands has got absolutely nothing to do with issuing visas for travel to the Netherlands so I'm not sure where you got this information.
Bear in mind as well that if your relatives wanted to visit Britain as well they would need to organise their British vistors visas before they leave their country of origin. They would find very difficult to try to organise a visa to visit Britain from the British consulate in the Netherlands.
In a few years time we'll look back on immigration control like we look back on American prohibition in the thirties - futile and counter-productive.
