Dutch housing minister Hugo de Jonge’s plans to reform the rental housing market include a new upper limit for placing rent controls on property at around €1,000 per month.
De Jonge said this spring that he would regulate the rents of more of the country’s housing stock in order to ‘reduce excesses’ in the market and that he was thinking of an upper limit of between €1,000 and €1,250.
At the moment, landlords have free choice in deciding the rent of property worth more than 143 points in the regulatory system. Points are awarded for amenities such as the number of bedrooms, whether or not the apartment has luxury bathroom fittings and the age of the property.
The point total will now be increased to 187, which means nearly all rental property will be subject to some form of price control – as yet, it is not clear exactly how much. Just 9% of Dutch housing stock is currently available to rent to people earning more than €40,000 a year.
News of the extension of rent controls was heavily criticized by developers and investors at the time – partly because of the lack of clarity and partly because it would make some developments unprofitable.
Dutch real estate investors wrote to De Jonge warning that new home construction projects will slow drastically if he presses ahead with plans to regulate more rents. Without change, just 50,000 new homes will be built every year, rather than the 100,000 that the government is counting on, lobby group Neprom told the minister in July.
Higher wages and the cost of materials are also having an impact, with a 9% drop in the number of new rental properties coming on the market last year.
Rents are rising
Figures published by rental housing platform Pararius in October show that rents in the non-rent controlled housing sector in the Netherlands have risen sharply in the five big cities, and properties are let more quickly.
In Amsterdam, tenants with new contracts are paying 10.3% more than they did a year ago, with rents reaching €25.24 per square metre, or an average of €1,766 for a 70 square metre apartment.
In Utrecht, new contract rents were up 6.5% to €20.33 per square metre – or €1420 for a 70 square metre flat. In Rotterdam, The Hague and Eindhoven, rents for new contracts now average between €17 and €18 per square metre, Pararius said.
Owner occupied sector
Meanwhile, figures from real estate agents’ association NVM indicate that the average house sold for 5.8% less in the last financial quarter than between April and June. The Q3 results are the first solid indication that the Dutch property market is taking a downturn, after years of strong growth.
Rising interest rates in particular are reducing the amount would-be buyers can borrow. The government is also introducing tougher borrowing requirements for home buyers next year.
De Jonge will publish his detailed plans for reforming the rental housing sector in November.