Unbelievably, despite fierce and legitimate resistance from the industry and criticism from a variety of experts that included the Council of State, the Affordable Rent Act was passed by both the Upper and Lower Houses of the Dutch Parliament and entered into force on 1 July. This gives everyone very little time to prepare for applying it correctly, while the legal monstrosity unfortunately still contains many ambiguities and even impossibilities. We could talk at length about the process, unreliability and lies of the legislator and the repercussions for landlords and, most of all, tenants. Instead, let’s focus on a few of the consequences and – more importantly – opportunities of this act. It’s impossible to deal with all the changes in this blog but we’ll discuss the most important ones here.
Main points of the Affordable Rent Act
Implementation of this act has created a third category of properties: mid-segment rentals. The maximum permitted basic rent is decided via a residential property valuation points system (WWS). From the effective date of the act, we can divide properties into the following categories:
The WWS is now binding. This used to be enforceable for tenants if they applied to the Rent Assessment Committee. As of 1 July, municipalities can enforce this system and even impose high penalties if a landlord lets a residential property in the social housing or mid-segment rental sector at an excessively high rent.
Shared rental properties
A rather underhand change has also found its way into the law. When you want to let a property to more than two people who don’t share a permanent communal household, the rent must be determined using the points system for non-self-contained residential properties. This system also applies to current tenancy agreements, so how the minister dares to claim that the act only applies to new tenancy agreements is a mystery to me.
Rent increases
The government sets the maximum rent increases for all three sectors. Just to make things even easier, a slightly different method and maximum rent apply to each of the three sectors.
Listed buildings
Under the old points system, listed buildings were automatically awarded an additional 50points. This is because a listed building nearly always has a lower energy label and is much more expensive to maintain. Under the points system that applies from 1 July 2024, listed buildings aren’t awarded any extra points. Instead, a 35% surcharge is added to the rent. As a result, some listed buildings will move from the deregulated sector into the social housing or mid-segment rental sector.
Monitoring
The new law will be reviewed every three months to see whether the stock of mid-segment rentals remains the same. After a year the law will be subjected to a thorough evaluation. Incidentally, Mona Keijzer, the new Minister for Housing, strongly opposes this law, which makes us wonder how long it will remain in force or unaltered.
What do you need to do now?
Current tenancy agreements will generally remain unchanged, unless the property comes under the transitional law* or has been let to more than two people who are sharing the property.
However, the Affordable Rent Act applies in full to any properties let after 1 July 2024 and for these you’ll need to work through the following steps (together with an expert):
You can determine the number of points of a property on huurcommissie.nl. If the total is 187 or higher, you can let the property at a market rent and no maximum rent applies. If the total is lower than 187, then the property comes under the social housing or mid-segment rentalsector and the maximum basic rent will derive from the ‘Maximale huurprijsgrenzen voor zelfstandige woningen (Maximum rents for self-contained properties)’ table. Our Affordable Rent Act factsheet explains what you need to do in simple steps.
Naturally this act imposes other restrictions but also offers plenty of opportunities, such as adjusted options for temporary rental, for letting properties in the (new) deregulated sector or profitably in the mid-segment rental sector. The key here is to obtain customised advice and you’ve come to the right address for that. We’ve been advising clients for more than 25 years now and that includes this new law.
* The transitional law is complex and potentially in conflict with the ban on legislation with retroactive effect. It basically means that if your property has more than 143 points, it doesn’t come under the transitional law and the Affordable Rent Act only applies when you change tenants. Our offices can advise you on the transitional law and all aspects of the Affordable Rent Act.
