Dutch pension fund ASR stops investing in rental housing over affordable rent law

Pension fund ASR will stop building rental properties. The Affordable Rent Act, meant to protect tenants from exorbitant rents, has made these homes unprofitable, ASR CEO Jos Baeten told the NOS podcast Geld of je leven.

The Affordable Rent Act, which took effect on July 1, extended the points system that applies to social housing to part of the private sector. The rent for properties under 1,158 euros or 1,274 euros for new construction is now regulated based on what they offer in terms of size, insulation, and quality.

ASR has built many rental homes in the past, Baeten said. “We now have 15,000 rental properties, but we are not going to invest in them anymore,” he said. The pension fund aims for a return of 5 to 7 percent. “Now, with the new law, in combination with the high interest rates, increased construction costs, and land prices, we see that the return on rental properties cannot be achieved.”

Baeten considers it a pity, given the Netherlands’ housing shortage. But he must think of ASR’s clients. “If I do not achieve this return, the pension-insured person says: what are you doing now? You are making a loss on the money that I have given you to build up a good pension.”

He thinks the Cabinet should scrap the rent regulation and focus on enticing investors to build more homes. With a larger supply, the price will be lower according to economic law, he said. “This simply won’t help. The number of rental homes may even decrease.”

Private landlords and smaller commercial landlords are selling their properties into the owner-occupied market since the implementation of the Affordable Rent Act, the Land Registry confirmed this week. Housing corporations and large institutional investors were less impacted by the Affordable Rent Act and most aren’t planning to sell their rentals.