Since 1979, the Netherlands has had the housing valuation system, a system that determines the maximum rent you can ask for a property. This ensures that the rent is limited to a certain limit. Tenants have since that time had the option of challenging excessive rents with the landlord through the Rent Commission. However, if a property has sufficient rental points and is therefore above the “liberalization limit,” the landlord may charge a rent in line with the market, and there is nothing to challenge.
Since the introduction of the housing valuation system, this system has barely changed. However, as of July 1, 2024, this will change dramatically: the liberalization limit will shift from approximately 143 rent points to 187 rent points. In addition, some other important changes have been made:
- Compliance with the housing valuation system is now mandatory law, from which tenants and landlords may not deviate.
- Landlords are required to take a rent point count and attach it to the lease.
- Tenants must submit this lease, including the rental point count, to the municipality.
- Municipalities will actively enforce housing that is rented out in excess of the maximum rental point total allowed by law.
- Temporary housing rentals are no longer allowed.
- Tenants can have the rent reviewed by the Rent Commission at any time, even after 10 years.
- The transfer tax for homes you want to rent out has been increased to 10.4%.
Add to this the fact that housing in the Netherlands has never been so expensive, interest rates on rental mortgages are around 7%, landlords pay a hefty box 3 tax on their rented property, and hardly any new affordable rental housing is being built. It’s a recipe for trouble.
Why the Affordable Rent Act isn’t working
No private landlord is any longer willing or able to invest in small living spaces with rents of up to €2000, because with any property, the costs as a landlord can no longer be covered. To be able to pay at all the costs of transfer tax, tax charges and interest, a landlord must charge a rent of at least €1500 for each independent dwelling. I challenge anyone to point out a property for sale in the Netherlands that is still interesting for a real estate investor – there are none left!
And it gets worse. Almost every landlord of a property whose tenant is now terminating their contract will sell that property. This means yet another dwelling less on the rental market. The government wants to ensure more affordable rental housing with the Affordable Rent Act, but the result is that there are almost no more private rental properties being offered!
The need for review
Given the combination of this law, the increased tax burden, and the fact that hardly any new affordable rental housing is being built, it is almost inevitable that the government will be forced to roll back these measures. I just hope this does not take too long, so that further damage is not done to people’s enjoyment of housing.
