100,000 rental homes will be sold off if gov't further regulates rent

At least 100,000 rental homes will disappear into the owner-occupied market if the government pushes through with its plans to regulate mid-priced rents in the free market, according to research by real estate advisor CBRE. “That development is already underway. Every three months, 1,300 rental properties disappear in the 20 largest cities - and this number is rising,” Thomas Westerhof of CBRE told De Telegraaf.

According to CBRE’s calculations, the number of rental homes owned by investors will shrink from 751,200 to 651,400. That could take 20 years, as landlords will typically wait for the tenant to leave before selling.

CBRE used a 60-square-meter Amsterdam home with an energy label C and a value of 500,000 euros as an example of how the rent regulation would play out. According to the firm, these homes currently cost an average of 1,700 euros per month to rent. After the regulation, the rent will drop to 947 euros per month. The landlord can get a higher monthly income by selling the property and investing the money in a government loan, which yields 3 percent interest per year. “Then, the only scenario for the owner is to sell. You then wait until the tenant moves out,” Westerhof said.

CBRE expects the wave of sales to be concentrated in the large cities. “It is mainly the small homes that are at risk. That varies by city. A home in Amsterdam of 50 m2 that is very sustainable could just fall into the private sector. But they are often older apartments with fewer square meters. Many of those homes will fall into the regulated segment.” CBRE expects 20 percent of rental properties will disappear in the large cities.

According to CBRE, the shrinkage of the rental stock is already well underway - regulating more rent is only the latest measure the government is taking. Westerhof referred to the increase in transfer tax, purchase protection, and adjustments to the wealth tax in Box 3. “What remains in the free rental sectors, rents will go through the roof even further,” Westerhof predicts.