How does that work with the rental point count if you want to rent out a home in the free sector?
Let’s start with the basics. In the Netherlands you have freedom of contract. Basically, if you offer something, you can ask any price you want. However, this is not the case when renting out a home. In the Netherlands, the “Housing Rental Prices Decree” (BHW) applies. This includes the so-called rental points system. This system states that you may NOT ask what you want for homes with a certain valuation – in other words, rental points. In this, the government specifies a maximum basic rent. They do this through the home valuation system. There are two variants of this:
- The first variant is for independent homes (in short, your own kitchen, your own entrance, your own sanitary facilities).
- The second variant is for shared living spaces (for example: you share a kitchen and / or a bathroom).
The home evaluation system looks at how many points you receive for that home in various areas.
What is the liberalization limit / when are you in a rent-free sector??
You need at least 142 rental points to qualify a home as a rental home above the liberalization limit / rental home in the “free sector”. As a landlord, you can request any rent from 142 rental points. This is NOT allowed under 142 rental points!
Please note, if you already have tenants. From 2021, the annual rent increase will probably be limited to a maximum of inflation + 1%. Expressed in price: 142 rental points (December 2020) equals € 737.14 in rent.
Note: do not go for exactly 142 points. Make sure you are above with a safe margin of at least 8 points.
Rental points versus living space
You get the most points for the rooms in the house. Think of: how big is the living room, how big is the bedroom, bathroom, kitchen, etc. So you get points for this. You receive one point per square meter for living space.
However, you will not receive these points for all rooms in your home. This way you don’t get living space points for the toilet, the hall, cupboards if they are in the hallway and the meter cupboard. For example, a house of 70 m2 of living space, for example, may yield you only 50 rental points. A cellar box or bicycle shed provides 0.75 rental points per square meter.
Other things that will be checked:
- Which rooms are heated
- Do you have an intercom with video
- What kind of equipment is installed in the kitchen
- The shape and luxury of your sanitary facilities
- Length of your kitchen countertop
Type of taps (simple tap or one-hand operation), toilet (normal or hanging) and sink (single or double)
WOZ value and rental points
What counts heavily is the WOZ value. The higher this is, the more rental points. High WOZ values now ensure that small homes in a city like Amsterdam are above the liberalization limit. However, as of January 1st, 2021, weighting of the WOZ value will (probably) be limited to a maximum of 33% of the total number of rental points. This is called the “WOZ cap”. This will have consequences for these very small homes in a city like Amsterdam. For homes that (would) fall in the free sector until 1-1-2021, this is no longer necessary after this date. That is why it is important to compensate for this with a better energy index or a better BENG label. Please note: the BENG label will not count as heavily as per 1-1-2021 in the rental point count.
Submit rental disputes to the rental committee
In addition to the rental point system, there is the rent committee. This is a government advisory body where tenants can report if they think they are paying too much. Here tenants can contest their current rent. If they are upheld by the rent committee, the rent will be reduced retroactively to the amount set by the government.
Get property to the free sector
The energy performance and sustainability of a home are a very important part of the home evaluation system.
In practice, insulation is the best approach for upgrading a building to the free sector / above the liberalization limit. This is often done by:
- cladding of facades on the inside (retention walls or insulation boards)
- installing a good central heating boiler with the highest efficiency (HR 107 boiler)
- applying floor insulation
- applying roof insulation
- installing solar panels
- applying 3M window film on single glass (giving it the value of double glass)
- applying 3M window film to double welding (giving it the value of HR glass)
- milling out rebates and fixing HR glass
With insulation you can achieve about 40% of the number of rental points you need to get your home in the free sector.
The kitchen and sanitary facilities can also yield many points. A kitchen with a worktop of at least 2 meters and sufficient built-in appliances already provides 14 rental points. A wall-hung toilet with built-in cistern, double sink, lighting in the bathroom cabinet, etc. It all pays off.
Before you buy a house for rent, it is wise to do a ‘quick scan’ yourself, or by a specialized company, of the feasibility of getting the house in the free sector. In principle you can do such a quick scan from the Funda advertisement. You know the number of square meters, see the insulation facilities, read about the installations, the type of heating and you see the floor plans with measurements.
You can find the energy index of a home at: www.ep-online.nl
Which homes are less suitable for rental free sector?
Homes where it is more difficult to get them in the free sector are homes with a low WOZ value, homes with a low number of square meters and / or homes where it is difficult to improve the energy index (such as buildings with block heating).
Which homes score well for rental in the free sector?
- Homes with district heating score very well in the energy index
- Homes with a high WOZ value (but keep in mind the WOZ cap that we talked about earlier)
Homes with more than 90 m2 of living space
Homes with a high energy index or high scoring “BENG label”
Changes 2021 compared to 2020
The changes that are coming:
- We now have the energy index. It will be abolished from the 1st of January 2021. This will be replaced by the BENG label. This is getting a lot stricter. Therefore, try to apply for an energy index before 31-12-2020 if you still can.
As of 1-1-2021, the share of the points from your WOZ value will be maximized to 33% of the total number of rental points. Homes that (would) fall into the free sector until 1-1-2021, cannot be after this date. That is why it is important to compensate for this with a better energy index or a better BENG label.
The most common mistake: energy label versus rental points
You can use your energy label for the rental points if it is from before the 1 st of January 2015. If you have a younger label, the rental points calculation of the rent commission will award you points, but they are not valid. You are put on the wrong foot by the rent committee. As a landlord, you think it would be nice to have a minimum of 142 rental points and to be able to rent out your home in the free sector. Now your tenant will lodge an objection with the rent assessment committee and the rent assessment committee will destroy your rent points because your label is from after 1st of January 2015. In that case, the rent committee will not count your energy label and will look at a construction year scale. If your home was built before 1976, you will receive zero points. Now the strange thing is that if in the same situation your label would be from 12/31/2014, nothing is wrong!
The energy label and rental points
Note: an energy label therefore has NO status for the rental points. You really must have an energy index before January 1st, 2021. If you do not have an energy index before January 1st, 2021, you must request a BENG label as of that date. This is more expensive to request and will also count less heavily in the rental point count. If you do not have a good label and as a landlord you only work with an energy label, you run a great risk. This is because the risk is that if the tenant objects to the rent with the rent committee, it will purely fall back on the year of construction of the house. The energy performance then no longer counts at all. A house that can normally earn more than enough points for the free sector can then suddenly fall into the social sector.
There are companies such as Boemerang and RentFriendly that scan the internet for homes for rent. Then they check whether there is an energy index on it. They can also look at neighborhoods where there is a lot of renting out. They will then actively approach tenants through Push Marketing. They offer their services to challenge the rent for the tenant on a “no cure no pay” base.
If you rent a room for up to three people, it is not wise to rent these out as non-self-contained units. If you do this and start renting out according to the home valuation system, the return you can achieve is usually very poor. This has to do with the fact that the home valuation system for room rental has not been adjusted since the 1960s. When renting a room, it is better to let one independent house to three people at the same time. So in that case rent to a “living group”.
Finally, some useful facts:
- A kitchen counter without cupboards underneath does not count. The depth of the kitchen worktop is not important. You can also take a shelf of Ikea of 30 cm depth (€ 15, -) with 2 cupboards underneath.
- With a protected cityscape, you often receive a surcharge on your permitted rent of sometimes up to 15%.
- The liberalization limit is an amount of € 737.34. Above has been liberalized. Below is regulated. The scoring is a tool to measure whether your value falls below or above the liberalization limit.
The table of the maximum rent is adjusted twice a year: on January 1st and July 1st.
You will receive fewer points on 1st of January and more points on 1st of July. If you are going to calculate the rental points, always take the first half of the year into account. The points between January 1st and July 1st differ around the four points. Most important advice: do not sit exactly on the limit of 142 points. Take enough margin. Better that you are at least on 150 or 160 points. You should therefore try to have your rent liberalized in accordance with the rental points system of the first half year.
- Are you going to renovate? You can earn two points per € 10,000 investment. This is about adding home quality, or home improvement. Not the maintenance.
- Applying for an energy index somewhere costs approx. € 200 incl. VAT.