More government measures announced for more affordable and accessible 'mid-market rented housing'
The Dutch government plans to implement a series of measures aimed at making the residential rental market more affordable and retaining more houses in the 'mid-market rental segment' (with a rent of EUR 720 – 1000).
In a letter to Parliament, Minister Ollongren (Interior) announced these intentions in broad outline. They include a plan to alter the housing evaluation system by placing a ceiling on the WOZ value (value for the purposes of the Valuation of Immovable Property Act) as a factor in the points system. The minister also intends to introduce a 'mid-rental emergency button'. This would enable municipalities to temporarily cap the starting rents in the private sector.
Maximising the influence of WOZ value in the housing evaluation system
The housing evaluation system (woningwaarderingsstelsel, WWS) allows the maximum rent for social housing to be determined by means of a points system. Self-contained rented housing with a monthly starting rent of up to EUR 720.42 (rent-control ceiling as at 1 January 2019) is considered to be social rent. Above that ceiling, rents are considered to be liberalised. In this private sector, the maximum rents of the WWS do not apply and landlords are free to determine the rents themselves.
The facilities in a house are one of the factors determining how many points are awarded to the house according to the WWS. If a house has more than 141 points as at 1 July 2019, the tenant and the landlord will be entirely free to agree on the amount of the rent. Since 2015, the WOZ value has also counted towards the score. When the policy was introduced, the idea was that the WOZ value would account for an average of 25 % of the maximum rent. It is now clear, however, that in more expensive areas the WOZ value leads to a far greater number of points than expected, resulting in more houses having a score above 141 and hence being lettable on a liberalised basis. The minister plans to maximise the share of the WOZ value in the total score. No bill has yet been made available, but the minister's letter to Parliament indicates that a maximum of 33 % is envisaged. This measure will lead to lower starting rents for new lettings. This may have implications, in particular, for investors who bought rental properties after 2015 and were counting on liberalised rents. It is unclear as yet whether the measure will also have an impact on current rents.
'Mid-rental emergency button'
It also remains unclear how the 'mid-rental emergency button' will take shape. Minister Ollongren thus aims to enable municipalities, under certain conditions, to temporarily cap the starting rents in the private sector. This is also a concern for private sector housing investors. Although the minister indicates that, when elaborating the measures, she wants to take into account a 'reasonable return' for investors, it is still unclear how this will be implemented.
It is recommended that due consideration be given to these potential developments. Loyens & Loeff will naturally continue to monitor the legislative developments.
If you have any further questions on this issue or would like to receive more information, please contact Marloes Voorrips, Julia Bausch or your trusted adviser at the Loyens & Loeff Real Estate Team.