Plan to regulate mid-market rentals adjusted to stimulate new housing construction

Outgoing Housing Minister Hugo de Jonge is adjusting his law for the regulation of mid-segment rental homes after receiving a lot of feedback on his bill. Developers who build for that segment over the next two years will be able to charge tenants 10 percent more rent for the next 10 years. The goal of the adjustment is that it should remain attractive for investors to invest in mid-segment rental properties.

De Jonge submitted the Affordable Rent Act designed to regulate mid-market rentals for consultation in February. According to him, the measures will reduce the rent of over 300,000 homes by an average of 190 euros per month. “With the Affordable Rent Act, we protect tenants, ensure a fair rent, and make renting affordable again for people with an ordinary income," he said at the time.

To ensure the new regulations don’t slow down new housing construction, a surcharge for newly built homes still to be delivered, amounting to 5 percent of the maximum rent, was introduced in the first proposal of the bill.

With the new adjustment, this surcharge will amount to 10 percent instead. The increase comes on top of the maximum rent proposed for the middle rental segment, which is 1123 euros. This means that tenants in those new construction properties will be able to pay a maximum of 1235 euros.

With the adjustment, De Jonge said he wants to persuade developers to continue building mid-market rental properties and to help revive many stalled projects. He also said that the new regulation will make it easier for landlords to keep the maximum rent after renovating their property.

“We are taking back control of public housing by better protecting tenants against excessive rent and doing so in such a way that the construction of new rental properties can still be completed. That also serves the interests of the tenants,” Minister Hugo de Jonge explained in the letter to the Tweede Kamer.

The minister came up with the adjustments even before the Council of State issued its opinion on the regulation. He said his goal is to give clarity to investors as soon as possible. He does not want to say that he is giving in to investors, but he understands that uncertainty about regulation is a problem.

It remains uncertain whether the law will pass. The VVD has now openly opposed it, and it also remains to be seen whether the BBB will support the proposal. Especially in the Eerste Kamer, the upper house of the Dutch parliament, where the BBB has 16 seats, that party could make the difference. It will no longer be possible to have the law take effect on January 1, 2023. De Jonge is now aiming for July 1, 2023.