Inflation behind Netherlands' biggest rent increase in six years

In July, Dutch landlords increased rents by an average of 2.9 percent - the biggest increase since 2014 and higher than the 2.7 percent average of the last ten years, Statistics Netherlands reported on Monday. According to the stats office, the higher increase is mainly the result of higher inflation.

For the first time in years, Amsterdam was not the Dutch city that saw the biggest increase in residential rents. That dubious honor went to Rotterdam, where rents increased by 4.1 percent. Amsterdam rents increased by 3.5 percent on average. The Hague also saw a higher increase than Amsterdam, with rents being 3.6 percent higher than in July last year. In Utrecht, rents increased by 2.6 percent.

The relatively high rent increases in Rotterdam, The Hague and Amsterdam contributed to the fact that Noord-Holland and Zuid-Holland saw the strongest rent increases. Drenthe, which has had the lowest rent increase in the Netherlands for years, tied with Groningen in third place this year with rent increases of 3 percent on average.

For regulated rental properties in the Netherlands, the maximum rent increase is the previous years' inflation plus an income-related surcharge. This means that higher inflation results in higher rents. And that is what happened this year. The inflation rate on which the maximum rent increase is based increased from 1.6 percent last year to 2.6 percent this year. Add to that the income related surcharge, and rents could increase by a maximum of 5.1 percent or 6.6 percent.

Over 42 percent of all homes in the Netherlands are rental properties. And about 70 percent of those belong to housing corporations. Housing corporation rents increased by an average of 2.7 percent as of July 1. Last year's increase was 2.0 percent. The average increase for this year may still be slightly higher, as some corporations decided to postpone the rent increase due to the coronavirus crisis. This is the case for about 100 thousand of the 2.3 million housing corporation homes.

In the free sector, rents increased by 3.0 percent in July, compared to a 3.3 percent increase last year. Almost 18 percent of free sector homes did not get a rent increase this year, compared to 7 percent last year.

Earlier in the coronavirus crisis, tenants' organizations and a number of opposition parties called for rents to be frozen temporarily, as many tenants were expected to face money problems due to the crisis. Just before the increase on July 1, housing corporations reported receiving thousands of complaints. But Minister Kajsa Ollongren of Home Affairs instead opted to call on housing corporations and landlords to be lenient on tenants facing real financial difficulties.