More landlords selling off their rental properties; Quarter with middle-segment rent

More landlords sold their rental properties into the owner-occupied market in the first half of this year, the Dutch realtors association NVM reported on Thursday. Eighty percent of realtors indicated that they’ve noticed a strong increase in these types of sales compared to the second half of last year. A quarter of sold rental properties fell within the mid-rental segment, with rents below 1,160 euros per month.

According to the realtors, a “cocktail of measures” is behind the sell-off of rental homes. The higher fictitious return in the box 3 tax on assets, the regulation of mid-segment rentals under the Affordable Rent Act, and the ban on temporary rental contracts are by far the most often cited causes.

“Many private investors no longer achieve the necessary return and sell their rental properties, even if they were already rented in the middle segment,” NVM said. “In this way, many rental properties are disappearing into the owner-occupied market, while they actually already had a relatively affordable rent based on supply and demand.”

According to a recent study by the landlord organization Stichting Fair Huur, the Affordable Rent Act will make 60 percent of rental homes in the large Dutch cities unprofitable. The law, which recently got Senate approval, extends the points system that already applies to social housing to also include rental properties up to a rent of 1,123 euros and 1,235 euros for new construction.

Former Housing Minister Hugo de Jonge was never too concerned about landlords selling off their rental properties, saying that new rentals would fill that gap and sold rentals would benefit people struggling to enter the owner-occupied market. However, according to the NVM, that is not necessarily true.

“The homes that were previously rented out and are now being sold are not really going to help the existing owner-occupied housing market. That’s a drop in the ocean,” said Lana Gerssen, the director of the NVM’s Housing department.

“The groups that rely on the rental sector also do not benefit from the sell-off. These groups, with a middle or lower income, are often unable to finance the homes they previously rented in the owner-occupied sector,” Gerssen continued. “And for tenants looking for mid-range rent, it has a disastrous effect because the rental supply becomes even smaller.”