Table of contents
The Dutch rental policy is on the brink of change with the regulation plans proposed by Minister De Jonge for the mid-rental sector. Are you curious about what this might mean for you as a tenant? In this article, we update you on the following topics:
- What are the current rules for rental prices in the Netherlands?
- What are the new plans for the regulation of mid rentals?
- What are the responses to the new government plans?
What are the current rules for rental prices in the Netherlands?
In the Netherlands, the housing valuation system (WWS) is in place. This is a system used to determine the maximum rental price of a rental property. Currently, this system only applies to social housing. However, the government has plans to also implement the WWS for the mid-rental sector starting from January 1, 2024.
Social housing
For social housing, there is already a maximum rent that may not be exceeded. This maximum rent is determined based on the WWS. If the rent of a social housing property is too high according to the points, the tenant can object to the landlord or the Rental Committee.
Rent increase for social housing
Until July 1, 2022, the rent of a social housing property could not be increased. From July 1, 2022, rents could be increased up to a maximum of 3.3%.
From July 1, 2023, the following rules apply for increasing rent prices of social housing:
- The maximum rent increase is 3.1% when the basic rent is €300 or more per month.
- The maximum rent increase is €25 when the basic rent is below €300. This amounts to a higher percentage than 3.1%.
Want to know more about this? Check out the website of the Dutch government.
Is a landlord asking for an unreasonably high rent increase? Then the tenant can object to the landlord. If the landlord still wants to implement the increase, he must ask the Rental Committee for a decision.
Private sector rental housing
For private sector homes, also known as private sector rental housing, there is (yet) no maximum rental price. Landlords of private sector homes can currently still determine the rental price they ask.
Tenants of private sector homes have the option within the first six months of the rental contract to ask the Rental Committee to assess the rent. After that, tenants can ask the landlord to lower the rent, but the landlord is not obliged to cooperate. If no agreement is reached, the tenant can involve the court to lower the rent.
Rent increase for the private sector
A landlord has the right to increase the rent annually, but there is a maximum rate.
- For the year 2022, the maximum rent increase was set at 3.3%.
- For the year 2023, the maximum rent increase was set at 4.1%.
When a landlord wants to implement a higher rent increase and no agreement is reached, the tenant can involve the Rental Committee to make a decision.
The housing valuation system and the Rental Committee thus offer tenants the opportunity to check the rental price and possibly object if it is too high. The aim is to protect tenants from unreasonably high rental prices and to promote a fair and affordable rental market.
How does the housing valuation system's point system work?
The rent of an independent home, such as an apartment or a single-family home, is based on a points system. Various features of the property, such as area, energy performance, and WOZ value, are valued with points. The total number of points determines the maximum rent. Social housing can receive up to 142 points.
With the new plans from Minister Hugo de Jonge (Housing and Spatial Planning), a new rental segment is being added. Homes that are valued between 142 and 187 points fall under the segment “regulated mid rentals”. The maximum rent that will apply to these homes (if the bill is passed) is approximately €1,000 per month.
What are the new plans for the regulation of mid rentals?
As you could read, the housing valuation system (WWS) is currently only applicable to social housing. On February 27, 2023, Hugo de Jonge presented the initial outlines of the legislative proposal for the Mid-Rental Regulation Act to the House of Representatives. The core of the proposal revolves around making the WWS applicable to homes in the mid-segment (regulated mid rentals). If this bill is passed and comes into effect on January 1, 2024, there will also be a maximum rent for homes with a WWS score of up to 187 points.
Intended goals of mid-rental regulation
The aim of this regulation is to improve the affordability of rents for middle incomes and to stimulate the construction of a significant number of new mid-rental homes. Minister Hugo de Jonge has outlined several key elements regarding the design of the regulation and its implications for tenants and investors in a recent letter.
Rent price protection
One of the important aspects highlighted in the plans is the threshold for rent price protection based on the housing valuation system (WWS). This threshold is set at 187 points, meaning that from 2024 most rental homes will cost less than €1,000 when a new rental contract is signed.
Currently, many homes with lower quality are rented for more than €1,000 per month. These rental prices will be adjusted downwards. The government expects that this regulation will ultimately result in more than 90% of rental homes (social housing and mid rentals) being rented for less than €1,000 under a new rental contract, thus addressing market excesses.
According to the minister, the rents of approximately 300,000 homes will decrease by an average of €190 per month. It is likely that these homes are primarily located in the Randstad. The regulation only applies to new rental contracts and is periodically evaluated.
Modernization of the housing valuation system
The government also has plans to modernize the housing valuation system. The goal is to better align the points system with the quality of rental homes so that tenants pay a fair price for the property they rent.
This involves examining various aspects, such as an overall price markup on the WWS, adjustments to the cap on the WOZ value, and the valuation of sustainability and outdoor space of the home. A model is currently being developed to provide insight into the possibilities of modernizing the housing valuation system.
Energy-efficient homes with energy labels from A to A+++ will receive more rental points, while homes with poorer labels E to G will receive fewer points. Outdoor spaces such as balconies and gardens are also rated higher.
Encouragement of mid-rental housing construction
In addition to the regulation and modernization, it is essential to ensure sufficient new mid-rental homes. The government's goal is to build a total of 900,000 new homes by 2030, of which approximately 40% (350,000) should fall into the affordable purchase segment or mid-rental segment.
Corporations will build 50,000 of these mid-rental homes, while the market will be responsible for constructing the remaining 300,000 mid-rental homes and affordable purchase homes. This way, the aim is to ensure both the affordability and availability of mid-rental homes.
Exceptions for rental prices of new homes
Although the regulation plans are intended to deter real estate investors from the housing market, it is important that new construction is not delayed. Therefore, an exception is made for new homes. The rent of a new home may be 5% higher than according to the housing valuation system, but this markup only applies to mid-rental homes that are delivered after January 1, 2024, or whose construction started before January 1, 2025.
Previous changes in the housing valuation system
In recent years, various changes have already been made to the housing valuation system.
Since 2011, for example, the energy performance of a home has been included in the point calculation. In 2015, the WOZ value was introduced as a replacement for the points previously awarded for the type and location of the home.
From May 1, 2022, a limit has been set on the number of points awarded based on the WOZ value. For homes with a regulated rental price and 142 points or more according to the WWS, the share of WOZ points is limited to a maximum of 33%. This limitation is intended to prevent the WOZ value from having too much influence on the maximum allowable rental price.
What are the responses to the new government plans?
Responses to the government plans for regulating the mid-rental sector are mixed and vary depending on the stakeholders involved.
Tenants and tenant organizations
Tenant organizations and tenants are generally positive about the regulation plans. They welcome the protection of tenants and the limitation of rent increases. Creating a new rental segment for the mid-rental sector and limiting annual rent increases is seen as a step in the right direction to make affordable rental homes more accessible.
Real estate investors and landlords
Real estate investors and landlords, especially those active in the mid-rental market, have generally reacted negatively to the regulation plans. They are concerned about reduced investment opportunities and expect significant rental income losses. Property Interest, the interest group for small property investors, has openly criticized and warned of possible negative consequences, such as delayed new construction projects and limited investment space.
Municipalities and housing corporations
Municipalities and housing corporations have mixed reactions to the regulation plans. Some municipalities and housing corporations welcome the measures as a way to balance the rental market and promote affordable housing. They see it as an opportunity to reduce pressure on the housing market and protect tenants.
On the other hand, some municipalities and housing corporations are concerned about the financial implications and possible constraints that the regulation plans entail for new construction projects.
Politics
Political parties have taken different positions regarding the regulation plans. Left-wing parties generally support the measures as a way to stabilize the rental market and ensure affordable housing. Right-wing parties have criticized and warned of possible negative consequences, such as reduced investments and disruption of market dynamics.
Note: this is a general overview, individual responses may vary. The discussion about the regulation plans is the talk of the day, so there will definitely be further responses and adjustments.