Dutch central bank president argues for scrapping Affordable Rent Act

The new Cabinet would be wise to reverse the rental law of former Housing Minister Hugo de Jonge, according to President Klaas Knot of De Nederlandsche Bank (DNB). According to him, the supply of rental properties has shrunk considerably since its introduction in July this year, while rental prices have increased.

The Affordable Rent Act was intended to make renting more affordable. However, there was also criticism. Due to the cap on rent for properties in the middle segment, real estate investors find it less interesting to rent out properties. As a result, many more rental properties are now being sold into the owner-occupied market.

“I don’t want to make a political judgment about a law that was ultimately adopted by parliament. But I do look at the consequences,” Knot told ANP at the annual meeting of the International Monetary Fund (IMF) in Washington. According to him, the number of available rental properties in the private sector is 38 percent lower this quarter than a year ago.

He also sees that small rental companies, in particular, are putting their rentals up for sale. “In addition to the Affordable Rent Act, they also have to deal with the stricter rules in box 3 and the purchase protection.” Large investors are still keeping their rental properties for the time being, but are in danger of focusing less on the mid-range rental properties that are sorely needed for mobility in new construction projects. According to Knot, these properties are particularly popular with young people and people with lower incomes - people who already have a hard time finding a home.

“If you put these things together, it is difficult to come to a positive judgment about this,” Knot said. According to him, some of the damage has already been done. “But yes, you know the saying, better to turn back halfway than to go astray completely.”

Owner-occupied homes are also scarce and prices are rising rapidly. Knot thinks that prices will continue to rise sharply for the time being. However, he is satisfied with the government’s approach to increasing supply. The government is really working on building more houses, he sees, and wants to discourage speculation with building land. “But we should not expect miracles that will lead to a less sharp price increase or something like that in the short term.”

According to Knot, the government should also look at reducing the financing space for home buyers that is inflated by tax benefits such as the mortgage interest deduction. “But unfortunately, this government, like previous governments, is not doing anything about that.”