Amsterdam expects rent regulation to double its mid-segment rentals

Amsterdam expects that the Affordable Rent Act, which took effect on July 1, will cause a significant shift from the expensive to mid-market rental segment in the housing market. The municipality estimates that the number of mid-segment rentals will more than double from the current 30,000 to 73,000 in the coming years, AT5 reports based on answers the municipality sent to the city council.

Of the roughly 150,000 private rental homes in Amsterdam, almost half are in the expensive segment. That is 71,000 homes with rents over 1,158 euros per month. The municipality expects that the rent regulation in the Affordable Rent Act will half the number of rentals in this segment.

And 36,000 of those homes will go to the middle segment. Only 20 percent of private sector rentals currently fall into this segment, with a basic rent between 880 and 1,158 euros per month.

Amsterdam also expects that about 20 percent of social rental properties will soon fall into the middle segment. An “unwanted effect” of the new law is that it will actually increase the rent of around 9,000 of the 50,000 social rentals, the municipality said. “Amsterdam, together with other parties, has frequently pointed this out to the government, but we were unable to get it off the table.”

The municipality said the shifts in the housing market could take years because the new law only applies to new rentals—landlords only have to apply the new rules when they sign a new contract with tenants. Landlords could also invest in their homes so that they fall into the more expensive, unregulated segment. Some landlords may also sell their rentals.

Since July 1, the Netherlands has been regulating mid-priced rentals that used to fall in the private sector. They now fall under the same points system that applies to social housing. A maximum rent of 1,158 euros applies to new contracts based on what the home has to offer. Many private landlords are selling their rentals as soon as the tenant leaves, saying that the rental income is too low after rent regulation took effect. Large commercial landlords are less affected and don’t plan to sell their properties.