Law against high rents has limited effect on newly-built homes

Outgoing Housing Minster Hugo de Jonge’s Affordable Rent Act will have only a very limited effect on newly built rentals, according to calculations by the tenants’ association Woonbond. Under the law, only tiny homes up to 55 square meters will be subject to regulated rent. The Minister made too many concessions to the large real estate parties behind much of the new construction in the Netherlands, the association told Trouw.

The Affordable Rent Act is intended to limit excessively high rents in the private sector by extending the points system that applies to social housing (with rents up to 880 euros charged for a rental with 148 points) to cover private sector homes with rents up to 1,123 euros (186 points). The bill immediately sparked severe resistance, with many landlords and real estate investors threatening to pull out because private sector rentals would no longer be profitable.

The Minister, therefore, made several concessions. Higher rents can apply to homes with an energy label A++, the property value (WOZ) is heavily included in the rent, and landlords of new construction may temporarily charge 10 percent extra rent.

According to the Woonbond, that is far too many concessions. Two-thirds of all newly built homes cost over 400,000 euros, and all new construction now has an energy label of A++, the association pointed out. That means that most newly-built homes will easily achieve more than 186 points, excluding them for rent regulation. Homes worth up to 300,000 euros only fall under the rent-restricting rules if they are smaller than 55 square meters, the association said.

The Woonbond says it supports the Affordable Rent Act, but too little remains of its goal - making more rental properties affordable to middle-income earners. The Tweede Kamer, the lower house of the Dutch parliament, will debate the law soon.