Small real estate investors suing Dutch government over changes to rental property rules

A group of small real estate investors united in the Fair Rent Foundation is suing the Dutch government over changes to the rental rules. According to them, the value of their property is not sufficiently reflected in the rents they are allowed to charge under the new rules, and they want compensation for this.

The private landlords are particularly unhappy with the rule implemented last year stating that the average market value - the WOZ value - of their home can only count for 33 percent in the points system for rental properties. The rule moved tens of thousands of rentals from the private sector to the regulated social housing sector, where landlords are capped on how much rent they can charge.

The measure mainly affects landlords in the big cities, where many homes have a high WOZ value. “The measure is ineffective in other parts of the country because the WOZ value is not high enough to reach the 33 percent threshold. That in itself is a discriminatory element in the scheme,” the foundation said.

According to the investors, the new rules infringe on their property rights and don’t contribute to solving the housing shortage. “Landlords can no longer invest sufficiently in the homes, such as to make them more sustainable. Rental properties are also being sold en masse,” the foundation said. “The consequences of these measures also affect the tenants of these homes because there is scarcity in the private sector.”

The Fair Rent Foundation filed the lawsuit on behalf of around 400 investors who together rent out at least 10,000 homes. They range from private individuals with a few homes for retirement purposes to larger professional landlords.

The lawsuit demands that the government repeal the new rental rules and compensate landlords for the damages they suffered. “The foundation strives for normal market rent in balance,” the foundation said.