Private investors massively selling off rental homes
Last year, investors sold 11,700 more rental homes to owner-occupiers than they bought. That is a “record amount” of approximately 1 percent of the rental housing stock in the private sector, the Financieele Dagblad reports based on three researchers’ study of Land Registry figures. Private investors, in particular, are ditching their rental homes. Last year they sold a net of 6,800 rental homes to people who live there.
“For years, the story was that investors were withdrawing homes from the owner-occupied housing stock en masse by buying them up and renting them out,” researcher Marc Francke, professor of real estate at the University of Amsterdam, told FD. “We are now seeing an opposite development.”
In recent years, real estate investors in the Netherlands have been confronted with a growing pile of regulations limiting their returns. The transfer tax for investors gradually increased to 10.4 percent of the purchase price, many municipalities implemented purchase protection in some of their neighborhoods to keep investors out, and Housing Minister Hugo de Jonge plans to regulate part of the private sector rental properties from July this year.
In January, De Jonge told parliament that these measures have not led to investors selling off their rental properties en masse. Strikingly, he also based his conclusions on figures from the Land Registry. He reported that investors sold 33,409 rental properties last year, less than the 43,652 sales in 2022. He did add that private investors hardly purchased any homes last year.
However, according to Francke and his fellow researchers - housing market economist Matthijs Korevaar and Lianne Hans, a researcher at the Land Registry - only looking at the total number of purchases and sales gives you a clouded picture of developments in the market. “The relevant question is whether investors are withdrawing or adding homes to the stock of owner-occupied homes and what type of homes are involved,” Francke told FD. “For example, if investors sell homes to each other, not much changes.”
The researchers analyzed all transactions of existing homes between real estate investors and owner-occupiers between 2009 and 2023. They found that since 2009, investors have sold over 48,000 more homes to owner-occupiers than they bought from them. However, there were many shifts in the purchase and sale of homes in that period, mainly caused by private investors. This group bought many homes in 2016-2020, but their sentiment changed from 2021 onward. That is clearly visible in a peak in the purchase of homes in December 2020, just before the first increase in the transfer tax for investors.
Last year, the number of sales of rental homes to homeowners increased significantly. In the last quarter of 2023, 11.6 percent of home sales involved private home seekers buying a former rental. Private investors mainly sell cheaper homes in the big cities - the homes that will be impacted by De Jonge’s plans for rent regulation.
De Jonge still isn’t too concerned. He told FD that “even with a certain degree of expansion, the affordable rental stock continues to increase,” both through the regulation of mid-priced rents and through the construction of new rental properties. He also pointed out that first-time buyers are now having an easier time finding an affordable home. “The fact that the homes sold are slightly cheaper on average means that they are more accessible for first-time buyers.”
