A change to property rental laws in The Hague is causing chaos and confusion for housing associations, real estate agents, real estate investors, landlords and tenants.
The Dutch government has for some time regulated the housing market for non-liberalised living space (also known as social rental housing). In addition to the national laws and regulations, Article 4, paragraph 1, sub a of the Housing Act 2014 offers municipal councils the option to draft further municipal regulations. To date, this possibility existed only for “cheap living space”.
In April 2019, however, Minister Ollongren (Minister of the Interior) submitted a legislative proposal to amend the 2014 Housing Act. This law was piloted by the Senate on 28 May 2019.
This amendment brings an important change: municipalities can now set additional conditions for the rental of all living space, instead of only for cheap living space. This also ends the possible discussion about the scope of the concept of “cheap living space”.
Housing Regulation 2019 The Hague
As a result of this amendment to the law, the municipality of The Hague has drawn up the new Housing Regulation 2019, designed to combat housing scarcity and a high rise in rental prices. This Regulation shall enter into force on 1 July 2019 and shall expire on 1 July 2023 at the latest. Within the regulation, there are two key changes.
1 – Housing Permit required for rentals up to €975.92
The Housing Regulation 2019 prohibits landlords from renting cheap and medium-sized living space to tenants without a Housing Permit. The limit is 185 WWS points (based on the rental valuation system or woningwaarderingsstelsel) and / or a rental price of a maximum of € 975.92 (price level 01/07/2020).
Within the category of homes with a rental price of between € 737.14 (liberalisation limit 2020) and € 951.19, a Housing Permit is only granted to single-person households with a maximum income of € 58,583 (2020 limit) or multi-person households with a maximum income of € 68,583 (2020 limit).
Lessors who rent out a living space for which a Housing Permit is required to a tenant without a Housing Permit can be subject to fines ranging from € 5,000 to € 20,000. Real estate agents, real estate investors and landlords are therefore now required to check carefully whether potential tenants’ income excludes them from renting a particular property.
2 – Ban on splitting homes
Another important change to the Housing Regulation is that homes in a large part of The Hague may no longer be split. The underlying idea is that creating housing by splitting existing homes can have negative consequences for the standard of the homes and for the character and quality of life in the area.
In areas where splitting is still permitted, this is only possible if the newly formed home is at least 40 m2 in size and consists of at least one complete building layer. For an overview of the splitting ban, see the map on page 40 of the Housing Regulation 2019.
In addition to the division ban in the above-mentioned area, the municipality of The Hague can also refuse a permit for the withdrawal, or conversion of housing if the importance of retaining or composing the housing stock is greater than the interest of the change proposed by the applicant (Article 5.5 paragraph 1 sub a). Housing Regulation 2019).
Based on the policy “Beleidsregel Omzettingsvergunning Den Haag 2020”, conversion permits in The Hague districts for self-contained houses with an average WOZ value under € 165,000 will be refused from March 2020. The following neighborhoods are specifically mentioned in the relevant policy rule: Zuiderpark, Moerwijk, Morgenstond, Bouwlust / Vrederust, Leyenburg, Groente- and Fruitmarkt and Laakkwartier and Spoorwijk (only the neighborhoods Laakhaven-West and Spoorwijk). The conversion of houses into multiple occupation was restricted in large parts of the city.
But the city council of The Hague wants more: an immediate stop on conversions in the entire city. A broadly supported council proposal was submitted on May 13, 2020, in which the mayor and aldermen is requested to decide by May 27, 2020 that conversion permits will be refused for the entire city for the time being. This will of course have consequences for real estate developers and current licensing procedures.
Temporary emergency stop?
MPs from D66 and CDA have also submitted a motion in which they request the government to investigate the possibilities of a temporary “emergency stop”. With such an emergency stop, municipalities could freeze the annual indexation of rental prices or even set a maximum rental price.
The topic “emergency button” disappeared into the background for some time. On 11 November 2019, the then Minister for the Environment and Housing, Van Veldhoven-van der Meer, emphasised during a budget debate that the emergency button is by no means out of the question (Parliamentary Papers II 2019/20, 35 300 VII, no. 90, p. 64).
On 15 May 2020, Minister of the Interior Ollongren informed the House of Representatives about new (far-reaching) measures that must further regulate the free sector. The dreaded total emergency button is not coming. However, Ollongren has announced that rents in the free sector can be increased by inflation + 2.5% over the next three years, in line with the maximum in social housing. After this period it will be reassessed whether a maximum is necessary for longer.
For all homes with a maximum of 185 WWS points and/or a rental price of up to € 975.29 tenants are now required to have a housing permit.
This housing permit will only be granted to single-person households with a maximum income of € 58,583 (2020 limit) or multi-person households with a maximum income of € 68,583 (2020 limit).
In the majority of The Hague a prohibition now applies to splitting homes, and in the remaining area additional conditions apply for splitting.
The regulation will enter into force on July 1, 2019 and will expire on July 1, 2023 at the latest.
The old regulations continue to apply to applications from home seekers for urgent declarations or for housing permits that were submitted before 1 July 2019 if this is more favourable for the applicant.
Advice you can trust
The Housing Regulation 2019 has led to many questions from our clients, as the new legislation will affect housing associations, real estate agents, real estate investors, landlords and tenants. It is also important to note that the Housing Regulation 2019 also has far-reaching consequences for the smaller private landlords.
If you would like further advice about the Housing Regulation 2019 or would like to know what the new legislation means for your case, please contact us; we’ll be pleased to help.