New regulation for the middle rental sector in the Netherlands
Changes will enter into force in a year from nowNetherlands, 19 December 2022 | The future of the EU & Housing
In the Netherlands, a new housing valuation system (WWS) will apply from 2024 to rental properties with a maximum rent of €1,100. This is the core of the proposal by Dutch Housing Minister De Jonge to regulate mid-market rents, which he presented on December 9, 2022. Housing Europe's member, AEDES has welcomed the proposal as "in the current housing shortage, it is necessary that we protect tenants against excessive rents" its chairman, says Martin van Rijn said. Martijn Eskinasi, a policy research manager from the Directorate-General of Housing and Construction in the Ministry of Interior and Kingdom Relations in the Netherlands explains more.
“Especially in the major cities, the number of affordable rental dwellings witnessed a significant decrease over the last couple of years. This is problematic for everyone, especially for many key workers in essential services like health care, education and public safety. The Dutch government, therefore, decided to extend existing rental regulation into the middle rental sector (up to approx. €1.100). Furthermore, rent regulation will be enforced much more strictly than before, in order to reduce excessive rents. The package will be introduced on January 1, 2024 and lower rents for over 300.00 tenants with apprximately €190 per month,” Hugo de Jonge, Dutch Minister of Housing and Spatial Planning said.
"Finding an affordable home for middle-income households has become increasingly less self-evident in the past few years. This scarcity has led to excesses through which the rent is no longer proportional to the quality of the home. (...) That's why I want to regulate the middle-income rental segment. It is of importance in designing this regulation that a balance will be struck between on the one hand alleviating the financial burden on tenants and on the other hand guaranteeing a steady supply of middle-income homes," the proposal also reads.
Rent regulation in the Netherlands is based on a point system, valuing different utilities like floor space, sanitary provisions, energy performance, and house value among others. The resulting number of points corresponds to a legal maximum rent. Currently, housing associations ask for rents at approximately 70%-75% of this legal maximum, because of their social objectives. The situation in the PRS is currently rather ambiguous: freedom of contract is the legal starting point, but for dwellings below 142 points (approximately 760 euros), tenants have the right to appeal to the so-called Rental Commission within six months of closing the rental agreement, in order to have their rents checked and adjusted. Many tenants are not aware of this option or are afraid to do so, especially when they have a time-limited rental contract.
Even though the national average in the PRS is approximately 90-95% of the legal maximum (pension fund landlords tend to favor long-term reliable tenancies and some regions have lower-than-maximum market rents), especially in the larger popular cities, many dwellings have higher or even excessive rents. The working of the point system is not only extended to 186 points, but for this segment, contract freedom will be subordinate to rent regulation. Landlords will be legally bound by the point system at the risk of significant financial penalties.