Minister Hugo de Jonge wants to get rid of excessively high rents. Just like housing associations, landlords in the free sector must also determine the maximum rent for their home by means of a points system. The upper limit for most rental properties should then be about 1,000 to 1,250 euros rent per month.
The intervention is a revolution in that part of the Dutch housing market that for a long time received little attention from the government. The laws of the free market have caused rents to rise rapidly in recent years. The more demand for rental houses, the higher the rent a landlord can charge. In the last twelve months alone, the free rent for new contracts shot up by more than 20 percent.
In construction projects, municipalities demand significant percentages of social rent and ‘mid-market rent’, much to the dissatisfaction of investors. With effect from 2024, private landlords, from small-scale scavengers to investors of pension money, will also have to limit themselves to rent according to the points system. The number of points is determined by, among other things, the length of the countertop in the kitchen, the presence of a balcony and the dimensions of the house.
The sum should, it is the intention, in most cases lead to a rent below the stated maximum amount. Only for the largest, most luxurious homes can the landlord escape that financial straitjacket.
Good news for future tenants
The new pricing regime is good news for tenants who are going to sign a lease in two years’ time. The minister is still looking at whether current leases can be adjusted to the new price level – for the time being, this seems to be a difficult task from a legal point of view.
For tenants in the social sector who can afford a little more, the rent reduction can make the private sector attractive. They will be more likely to move. That could reduce the waiting list for social housing somewhat.
Perhaps there is even a sigh of relief through the owner-occupied housing market. After all, a satisfied free tenant will hunt less hard for a house to buy than his colleague with sky-high monthly payments. A number of investors may also lose interest in an owner-occupied home, now that the transformation into a rental home will yield less. If competition from investors disappears, first-time buyers in the housing market in particular will benefit.
Cold shower for the optimist
The same investors can also decide to divest their homes. This means that the number of rental homes is shrinking, but more owner-occupied homes are coming onto the market again. However, the optimist is probably waiting for a cold shower. Even without investors, there are usually more than enough candidates for a fierce bidding battle for every owner-occupied home.
The disadvantage of the plan is that there will be an even greater backlog in housing construction, investors in that sector warn. The cabinet wants to have 900,000 homes built up to and including 2030. Due to the decrease in the number of building permits issued, this already seems difficult to achieve. If investors have to settle for less rent, their enthusiasm for new projects will also decrease.
In order to keep investors on board, there is already speculation about subsidies, which should entice them to build cheaper free rental housing after all. Municipalities will be asked to sell their land for housing more cheaply.
New opportunities arise for corporations. If commercial parties disappear, housing associations can seize their opportunity in the free sector. The same applies to many thousands of tenants. If the cabinet gets its way, they can enjoy a considerably lower monthly payment.