New law to regulate mid-segment rentals, fine landlords for too-high rents
The Dutch government will soon also regulate mid-market rentals, expand the housing valuation points system (WWS) to cover mid-segment rentals, and fine landlords if they charge more rent than the home is worth. Minister Hugo de Jonge for Housing and Spatial Planning submitted the Affordable Rent Act for consultation on Monday. According to him, the measures will reduce the rent of over 300,000 homes by an average of 190 euros per month.
Private sector rents have risen excessively in recent years, the Ministry said. In the past five years, new tenants in the four largest cities regularly paid 160 euros per month more than the previous tenants. “Many tenants pay the top price for a home that is really not worth it. Tenants often don’t have a choice and have their backs against the wall,” said De Jonge. “With the Affordable Rent Act, we protect tenants, ensure a fair rent, and make renting affordable again for people with an ordinary income.”
The WWS already applies to social housing rentals, homes with a point value up to 145. The new law expands that to homes with a point value of up to 186. That currently amounts to 1,021.02 euros. The point value is indexed annually with inflation, and 186 points will amount to 1,123.13 euros when De Jonge expects the law to take effect. For these homes, the government will limit rent increases to the average wage increase in collective labor agreements plus 0.5 percent.
“The regulation of mid-market rental properties applies to new rental contracts and as long as there is a shortage in the housing market,” the Ministry said. The Ministry will evaluate the need for the regulation every five years.
The law also makes adherence to WWS mandatory, meaning landlords will be fined if they charge more rent than the home is worth.
De Jonge also wants to boost sustainability in rentals. The energy label will therefore count toward the WWS points. A sustainable home with an energy label A or higher will get extra points, while energy labels E and lower will result in points being deducted. “Landlords with a good energy label can ask for a higher rent, and tenants benefit from a lower energy bill.”
The Cabinet is also adjusting the valuation of outdoor space to account for the quality of the outdoor space. For example, a rooftop terrace of 20 square meters will count for more points than a 4 square meter balcony.
To ensure the new regulations don’t slow down new housing construction, the Cabinet is introducing a surcharge for newly built homes still to be delivered, amounting to 5 percent of the maximum rent up to 10 years after completion. This applies to mid-market rental properties that are completed after 1 January 2024 and where construction started before 1 January 2025.