Affordable rent act: Landlords selling off rental homes low-income households can afford
The Affordable Rent Act, with which outgoing Housing Minister Hugo de Jonge plans to regulate mid-market rentals in the private sector, will have adverse side effects for people with low incomes and those starting on the housing market - young people, immigrants, and divorces. Because the landlords selling off their rentals due to the law’s impact on their profitability are precisely those who cater to this group of tenants, Trouw reports based on a new study into the effects of the law.
Matthijs Korevaar, a housing market researcher at Erasmus University, and Jasper van Dijk of the Institute for Public Economics, studied what impact rent regulation for some of the private sector would have. Small private investors - landlords with only a few rentals to their names - have already started to sell their properties in preparation for the Affordable Rent Act cutting their earnings. De Jonge insists that’s not a problem because those homes will become available to buy. But Korevaar and Van Dijk disagree.
According to the researchers, their figures show that these small private investors usually rent out very mediocre homes, mainly to low-income tenants, often for too high a rent. “Historically, renting out poor properties simply yields the highest return,” Korevaar told the newspaper. It is, therefore, no surprise that they are dissatisfied with the plan to regulate their rents and are selling off their properties. “But no one should feel sorry for them. They can easily invest the money that is currently in their homes differently.”
What Korevaar is worried about is the tenants living in these homes - people with low incomes and newcomers to the housing market like young people, migrants, and divorcees. The study shows that the rental properties this group can rent - albeit at too high a price - are now being put up for sale. And they are purchased by home seekers with an average of 50 percent more income than the tenants.
De Jonge assumes that large real estate companies will fill the gap created with newly built homes. However, according to this study, the big players target tenants with significantly higher incomes. And the long waiting lists for social housing mean these tenants will likely be out of luck there.
The Affordable Rent Act will absolutely benefit some groups, Korevaar said. De Jonge promised that 157,000 households’ rents would decrease. People with higher incomes will also have a greater chance of purchasing a home as more rentals hit the owner-occupied market. But people with low incomes will pay the price for this, according to Korevaar.
The “painful” reality is that many low-income households depend on poor housing at a high price, according to Van Dijk and Korevaar. The Affordable Rent Act will impact them negatively, they said. “It is important to recognize this.”
