John has been a real estate investor for years and, just like many others, focussed on starter properties, rental properties and transforming old office buildings. When a good friend of his was going through a difficult divorce and couldn’t get decent, temporary living arrangements anywhere, something dawned on him.
His friend wasn’t eligible for government housing, didn’t qualify for purchasing a property and the waiting lists for regular rentals were endless. And yet he was in dire need of a roof over his head. And he wasn’t the only one.
Property crisis in divorces: a forgotten target group
In the Netherlands, tens of thousands of couples separate every year. Behind those number hides a practical disaster: one house, two people and no place to go. Banks won’t cooperate with a takeover. Municipalities refer to social amenities that aren’t there. And the private market has been shrinking due to government intervention for years and is filled with long-term contracts, high deposits and waiting lists.
John saw an opportunity to make a difference through real estate, without compromising on returns.
The solution: temporary letting to people going through divorce
Together with a few associates, he turned a former office building into 15 separate apartments, 5 of which would be furnished and rented out to people going through a divorce. We were contacted by John early on in the process to share our expertise and look into market value and solid tenants. It’s always interesting to see a project like this develop from the start! The need turned out to be huge: within two weeks all the apartments were rented out.
Fixed tenancy agreement law: rules for temporary letting in divorce
On July 1st 2024, the Fixed tenancy agreement law was introduced, which meant that indefinite tenancy agreements are standard and temporary tenancy agreements are limited. The “classic” temporary tenancy agreement may only be offered to specific target groups, among which:
- Students that live away from college or university;
- Persons in need of temporary living arrangements due to renovations of the current home;
- Persons between the ages of 16 and 27 that take over their deceased parent(s)/carer(s) tenancy agreement;
And the target group as mentioned in this blog;
- Persons going through divorce, that demonstrably do not live together and need temporary living space to live near their child(ren).
Temporary letting in practice
For John, it was an important consideration that the temporary tenancy agreements didn’t have a set minimum rental period. He was rightfully worried about the number of changes and vacancy in the building. In practice, it’s true that there are more changes (mutations), because people usually find a more permanent situation after a while which leads them to terminate their existing tenancy agreement. On the other hand, there is a continuous need for these properties, and even waiting lists, which guarantees minimal vacancy. For John, the social aspect of helping people going through divorce was the deciding factor.
It’s important for the tenancy agreement that this meets the legal terms and conditions. The tenancy agreement has to include a clear description of the tenants’ situation and how they fall into one of the exception categories, as well as a predetermined end date. Tenants may terminate at any time (with regard to a notice period of 1 calendar month) but landlords may only terminate at the end date (with notice 1-3 months before the end date). Should the agreement be extended, the law immediately dictates that the agreement is one for an indefinite rental period.
Letting with impact: return ánd social value
Short term letting is often associated with tourisme or expats. But there is an increasing number of people that are left out, people going through divorce, for example. As landlord, there isn’t just a return to be made, but there is every difference to be made. A temporary home means a new beginning for many. And thát is something worth working towards.
Would you like to know more about short-term letting, or are you considering offering a property to persons in this (or other) exception categories?
