It was almost impossible to miss the Affordable Rent Act coming into force on 1 July this year. We wrote about it at the time in this blog. Since its introduction, we’ve found ourselves in a new reality of greater complexity and even fewer residential properties available for those seeking to rent a home. Luckily, we can still identify plenty of opportunities in this overheated market.

WWS: complex but essential

One of the biggest changes is the mandatory calculation of WWS points that determines which rental segment a property comes under. Before a rental property can be (re)let, a detailed calculation of the WWS points must be carried out that takes both time and expertise. The residential property valuation points system (WWS) that forms the basis for this calculation has changed radically since 1 July. At Interhouse we’ve given our employees special training to enable them to carry out these calculations correctly. Landlords can therefore rely on us for accurate information and even more comprehensive letting advice.

We also recommend conducting this new calculation for existing/let residential properties so that you know where you stand as a landlord.

The disappearance of mid-segment rentals

One of the most noticeable consequences of the new act is the decrease in the number of available properties (in mid-segment rentals). While there weren’t that many properties in this segment to start with, we’re now seeing a significant decline in this type of housing stock. Although there are landlords who continue to offer mid-segment rentals, our statistics from the past few weeks show that many of these properties are being sold. This is exerting enormous pressure on the deregulated sector and pushing up prices. Potential tenants in cities such as Amsterdam, Rotterdam and Utrecht are fighting for the few available properties, and this is leading to overbidding and rents of up to 20% more than the asking price. Personally, I’m appalled that people dependent on mid-segment rentals or the deregulated sector are being left to fend for themselves under present policy. The government is staking everything on new rental properties to be developed by institutional investors, but such developments can easily take five to ten years to realize. This is no help at all if, say, you find yourself in the middle of a divorce, want to move in with a partner or come to the Netherlands for a new job.

Opportunities for landlords:

Invest!

It might sound crazy, but this is absolutely the right time to (re)invest. Demand for rental properties remains as high as ever. As long as the number of available properties decreases, not only is it an interesting investment to buy the right property, but as a landlord you’re also helping to solve the housing shortage.

Examine the components that make up the rent

Although there are significant challenges, there are opportunities for landlords too. Accurately setting the rent and smart use of additional costs, such as service costs or furnished lets, can improve your return. By taking advantage of the legal options, landlords can generate additional income via furniture or parking spaces, for example. It’s important to be creative and examine all the available options within the law.

Sustainability and improvements

Other opportunities lie in making your property more sustainable. Investing in energy-saving measures can result in your property remaining in the deregulated sector or even mean that you can charge a higher rent. A better energy label corresponds to a higher number of WWS points, which as a landlord gives you greater flexibility within the current system. This type of improvement not only yields a direct return but also makes the property more attractive to tenants.

Be prepared

This new reality demands a pro-active stance. Landlords need to act fast and ensure that they comply with the legislation to keep their properties profitable. At Interhouse we stand ready to give landlords customised advice, whether it involves calculating WWS points, making residential properties more sustainable, making optimum use of the components that make up the rent or searching together for potential opportunities for reinvestment.

Don’t just wait and see what happens – the market is changing fast and there are still opportunities out there, even in today’s challenging climate. Allow us to help you optimise your real estate portfolio and ensure that you can continue to make a profit even under the new rules.