Dutch Housing Market Shifts After “Affordable Rent Act”

The Dutch housing market is undergoing a significant shift, with private landlords increasingly selling off rental properties, especially in the largest cities—Amsterdam, Rotterdam, Utrecht, and The Hague. According to recent figures from the Land Registry, private landlords sold significantly more homes in the past quarter compared to the same period last year, largely driven by the Affordable Rent Act that took effect on July 1st.

Impact of the Affordable Rent Act

The new law extended the existing points system, typically applied to social housing, to a segment of the private sector. This regulation controls rent prices, making it unprofitable for many small landlords, particularly those owning smaller, lower-quality homes that previously commanded high rents due to the housing shortage.

Selling Outpacing Buying

In the second quarter, commercial investors sold around 5,900 homes to owner-occupiers, while buying only 1,100 homes from owner-occupiers to rent out. This net loss of about 4,800 rental homes reflects the shrinking rental sector. Most of these sales (2,900) and purchases (1,300) occurred in these four largest cities, highlighting the significant impact in urban areas. (Source: NL Times)

Market Dynamics

The properties sold by private landlords are mainly being bought by individuals who plan to live in them, turning former rentals into owner-occupied homes. Although major investors also sold some homes, they compensated for this loss by adding new constructions to their portfolios, leading to a net increase in their rental holdings.

Long-term Outlook

The trend of landlords selling off properties is expected to continue over the next two years, especially as offering a temporary rental contract (Model B) is not as easy as in the previous years, allowing easier sales than renting. Good news for the students; more landlords now prefer to have student tenants as they are one of the exceptions to be offered a temporary rental contract.

Implications for Renters and the Market

While the number of homes sold might seem small compared to the Netherlands’ total of over 8 million homes, this trend confirms predictions that the Affordable Rent Act would push many smaller landlords out of the market. The gradual reduction in rental properties could lead to increased competition among renters and potentially higher rental prices for those remaining in the market.

As the rental landscape evolves, the effects of the Affordable Rent Act will continue to influence housing availability, pushing the market towards more owner-occupied homes and reshaping the urban housing dynamic in the coming years.