News item | 09-11-2023 | 14:14
With the affordable rent bill, tenants will pay a rent that matches the quality of the home and it should remain attractive for investors to invest in mid-range rental properties. To continue to stimulate investments in affordable mid-range rent, Minister Hugo de Jonge is increasing the new construction surcharge in the affordable rent bill from 5 to 10%. This is stated in the progress letter with which he informs the House of Representatives about the affordable rent bill and the completed internet consultation.
“Many tenants long for affordable rental housing. In recent years, rents have risen far too fast for people with an ordinary income and too few affordable rental houses have been built. Housing affects people’s livelihoods, it is our job to ensure sufficient affordable housing. We are taking back control of public housing by better protecting tenants against excessive rent and doing so in such a way that the construction of new rental properties can still be completed. That also serves the interests of the tenants,” Minister Hugo de Jonge explains in the letter to parliament stating what adjustments he is making to make affordable rent possible.
Combating excessive rent increases
People with a middle income find it very difficult to find suitable rental accommodation in the current housing market. When a resident changes, an average of €100 extra is charged in rent. In the G4 this is even € 160. In 2023, as a new tenant for a private sector home, you will pay on average 10.9% more than the previous resident(s).[1]. This is the strongest increase since 2014. Intervention therefore remains necessary.
This will come to an end with the affordable rent bill. The proposed regulation of mid-range rent will offer tenants better protection against excessively high rents and by making the housing valuation system (WWS) mandatory, the maximum permitted rent can actually be enforced.
More than 1,800 responses to internet consultation
More than 1,800 people and organizations responded to the internet consultation on the Affordable Rent Act. Although most responses came from (private) investors, (rental) agents, developers, lawyers, tenants and students/young adults also made themselves heard. The majority of the responses were about the effect of the proposed measures on the returns of landlords and the accumulation of measures experienced by investors. This could lead to a decrease in mid-range rental properties. At the same time, many people said they supported the bill because of its great importance for tenants.
Continue to invest in mid-priced rentals
To make mid-range rent affordable again, it is crucial not only to focus on regulation, but also on creating an attractive investment climate for new affordable homes. Investors and developers jointly want to realize 50,000 mid-rental homes, and agreements have been made with corporations in the National Performance Agreements (NPA) for another 50,000 mid-rental homes. When designing the bill, Minister Hugo de Jonge takes into account that investing in mid-range rent remains attractive.
Firstly, the WWS will become more modern, making the system better suited to the quality of new mid-range rental properties. This way, the energy efficiency of a home and the outdoor space are given a better rating, and the WOZ cap will apply from 187 points instead of 142 points. If a home ends up in the middle segment due to the WOZ cap, a maximum of 186 points is used. This makes the rental price more predictable.
Secondly, there will be a temporary price surcharge for new construction in the WWS. This progress letter announces that the previously proposed price surcharge will be increased from 5% to 10%. The price surcharge is intended as a transitional law for new-build homes that have not been able to take the upcoming regulations into account in the preparation for construction. This increase to 10% creates additional space for mid-rental projects that were not prepared for the law.
The temporary new construction surcharge would apply for ten years to homes that are put into use after the bill comes into effect and for which construction starts before January 1, 2025. The limit of this start construction date has been moved by one year to January 1, 2026.
Affordable Rent Act
The Affordable Rent Act has four goals: improving the protection of tenants, creating more affordable rental homes, making homes more sustainable and encouraging investments in new construction. To protect tenants against excessively high rents, the government wants to regulate mid-range rents and make the WWS competitive. The WWS will apply to rental properties up to and including 186 points. The associated maximum rental price is € 1,123.13 (price level July 2023).
The law and the WWS ensure that rental prices are proportionate to the quality of the home. Landlords are obliged to adhere to the maximum rents and municipalities can enforce this. Thanks to these measures, the rental price of more than 300,000 homes will decrease by an average of € 190 per month. The intention is for the law to come into effect from July 2024.