18 November 2024
In recent years, the housing market has undergone significant changes. Transfer tax and the box-3 tax have been increased, the buyout protection and Good Landlord Act have been introduced, and temporary rental contracts are being abolished.
Soon, the Affordable Rent Act is also likely to follow. On 25 April 2024, the House of Representatives approved the Affordable Rent Act bill. If the Senate also approves the bill, the law is expected to come into effect on 1 July 2024. But is this really a good idea?
The introduction of the Affordable Rent Act will bring significant changes. The most notable change is the introduction of a middle segment, in addition to the existing social housing and private sector housing categories. The Housing Valuation System (WWS) will be mandatorily applied to both social housing and the middle segment. Social housing has a maximum of 147 points (€879.66), and rental properties in the middle segment have a maximum of 186 points (€1,123.13). Only for properties in the private sector (187 points or more) are landlords free to set the rental price themselves, as the WWS does not apply.
Tenants in the middle segment will also now have access to the Rent Tribunal for disputes about, among other things, rental price, service charges, or property maintenance. Another important change is that the WWS itself will be altered. For instance, WOZ values and energy labels will now be assessed differently, with poor energy labels potentially resulting in a deduction of points.
There is considerable criticism of the Affordable Rent Act. The Council of State fears that the number of rental properties in the middle segment will actually decrease significantly due to this Act. Alongside other measures, there is a high chance that landlords will no longer achieve sufficient returns and will sell off middle-segment rental properties. While a reduction in rent in the middle segment may be beneficial for tenants in the short term, it is likely to lead to serious issues in the long run. In addition to a decline in middle-segment rental housing, the number of “mismatched renters” will rise, and waiting lists are expected to lengthen due to less movement in the rental market. There is also a risk that private sector rents could become even more expensive.
According to the Dutch Central Bank (DNB), regulation of the middle segment is detrimental to the housing market and even harmful to the economy. Research shows that increased regulation further restricts mobility in the housing market, whereas the DNB stresses the importance of workers being inclined to move from regions with fewer job opportunities to areas with better employment prospects. Higher housing mobility leads to lower unemployment and increased labour productivity.
The Dutch Bar Association (NOvA) has also voiced criticism. The bill would change the definition of “self-contained accommodation” in the Housing Price Decree, which would in turn interfere with the definition of “self-contained accommodation” in the Civil Code, leading to undesirable and illogical outcomes. According to NOvA, it seems that speed is being prioritised over quality.
The Affordable Rent Act has far-reaching consequences for the housing market, especially in conjunction with the measures already introduced. For landlords, it’s a matter of hoping for a pause. The Senate now has the final say. We will keep you updated.
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