Growth of rental market entirely dependent on housing construction incoming decade

The economic research firm SEO has published a government-commissioned report stating that many of the existing mid-range rental homes will be sold in the next ten years. New mid-range rental properties are also expected to be built, but whether the total supply increases or decreases over that period will depend on the pace of new construction.

Mid-range rental homes currently have maximum rents ranging from around 900 to nearly 1,200 euros. Researchers estimate that about 30 percent of these homes, owned by companies and institutional investors, will be sold. Private landlords are also likely to sell properties due to higher interest rates, mid-range rental regulations, and changes in wealth tax.

The researchers point out that there are ample plans for new mid-range rental construction, with smaller units offering lower rents being especially appealing to developers. Over the next ten years, some of the existing mid-range rental homes are likely to be replaced by these new, generally smaller properties.

Much of the reduced appeal of investing in mid-range rental homes is due to external developments. The report highlights rising construction costs as one factor. Government policy also contributes, especially the mid-range rent regulations implemented by former housing minister Hugo de Jonge (CDA), while overall policy has become less predictable.

Mona Keijzer (BBB), who succeeded De Jonge, aims to ease some of the regulations on mid-range rentals. Under her plans, rents for small national monuments, for instance, could be raised in new contracts.

While these measures could make mid-range rental investments more profitable, they may also signal to investors that the rental market remains unpredictable.