The government’s most senior advisory body, the Council of State, has told housing minister Hugo de Jonge to improve his draft legislation aimed at increasing the amount of rent-controlled property in the Netherlands. 

At the moment it is “unclear” whether the new Affordable Rent Act will help prospective tenants and whether it will lead to a better supply of affordable rental housing, the council said in an analysis of the draft legislation.

There is also a “real risk” that the bill will lead to landlords selling their properties and a downturn in new construction, the council said, adding that it is also “unclear” how the minister intends to manage the risk that the bill will lead to the sale of existing rentals and fewer new builds. 

Scarcity and high demand

The current high rents are caused by scarcity and high demand, the advisory group said. “But in the legislation, the report said, the government is not paying enough attention to the causes of the lack of supply and the “interaction between the social sector, the owner-occupied market and the private rental sector”. 

The report was published on the same day that CBRE published new figures suggesting as many as 100,000 rental properties could be removed from the market over the next 20 years because of the increase in rent controls.  

Dutch developers have been warning for over a year about the likely impact of the increase in rent controls on the rental market and fewer new homes than expected were completed last year. The shortfall this year could be as many as 10,000, housing minister Hugo de Jonge warned earlier in November. 

Protection for tenants

De Jonge said in a reaction to the Council of State’s recommendations that new tenants usually pay ‘substantially more” for the same property when they sign a lease. The aim of the expansion of rent controls, he said, is to put an end to this and to offer tenants more protection. 

However, he said, it is “crucial” to focus on both regulation and on “realising an attractive investment climate for new affordable housing”. De Jonge points out that the ministry has already increased the temporary rental surcharge for new housing from 5% to 10% and is giving more weight to energy efficiency in determining the maximum rent for a property.

Now, he said, work can begin in adapting the bill to make it more substantial so that it can be debated in the lower house of parliament. The bill could come into effect in July 2024, he said, six months later than originally planned, but much will depend on the position of the next government. 

Developers, meanwhile, have welcomed the Council of State’s position. “We understand that excesses on the housing market need to be tackled,” said Desirée Uitzetter, chairwoman of developers organisation Neprom and area development director at Holland Metropole partner BPD. “But this legislation, in its present form,” she told the Financieele Dagblad “is not going to contribute to that.”