Developments in the rental market; sharing update by AGS-Global Solutions

Developments in the rental market; sharing update by AGS-Global Solutions

As you may have learned through the media, there are significant changes coming to the Dutch housing market on July 1st, 2024. Two new laws have been accepted by the Senate (Eerste Kamer), with the latest being approved on June 25th. Below is a brief overview of these changes:

 **‘End’ of Temporary Rental Contracts**

Currently, once you rent a property in the Netherlands, it’s very difficult for the landlord to ask the tenant to leave, assuming the tenant pays their rent on time and keeps the property in good order. To address this, the alternative Model B temporary rental agreement was created, allowing landlords to ask tenants to leave after a predefined period. Starting July 1st, 2024, this type of contract can only be offered under special circumstances, such as:

- Student Housing

- Temporary absence of the landlord due to a stay abroad

 **“Affordable Rent Act” - Point System (WWS)**

A house in the Netherlands can score a certain number of points, currently capped at 148 points, which limits the rent to approximately €880. If a property has more points, the landlord can set any price. Starting July 1st, 2024, the new cap will be 187 points, with the associated maximum rent being approximately €1125. Newly built properties can be rented out for 10% more.

A property scores points based on factors such as:

- Size (m²)

- WOZ value

- Energy label

- Design of the kitchen and bathroom

 From July 1st, landlords must share the point calculation for each new lease. Should a tenant disagree, a calculation can be done by the Rent Committee (Huurcommissie), which could lower the rent retroactively.

**Consequences for Your Employees**

For existing contracts, nothing changes. These laws apply only to contracts signed after July 1st, 2024.

For new contracts, it is difficult to predict the exact impact on the housing market. Those for and against the changes have different expectations and calculations.
**In Favor**

The Ministry of Housing expects that over 300,000 homes will see an average rent reduction of €190 per month. While some landlords may sell their properties, this is seen as a way to increase the availability of homes for first-time buyers.

The main concern is that renting out properties will become less profitable, making selling a better option, which will shrink the rental market and reduce available housing. This could force people looking for mid-market rentals (capped at 187 points) into the higher, uncapped segment, where rents can be significantly higher. 

This development will be leaving only social housing and expensive rentals starting at €1800 as the remaining options.

 **Our Expectations**

Based on recent market trends, we expect more landlords to sell their properties, leading to fewer rental properties available. Predictions vary, but both sides acknowledge potential changes in the rental market dynamics. We have already seen many landlords attempting to sell their properties and expect this trend to continue, especially as current tenants leave.

 We anticipate that the rental market will become even tighter. New arrivals in the Netherlands may end up in the higher, uncapped rental segment. While we cannot definitively state the expected rental amounts for a one-bedroom in city XYZ, we foresee a significant gap between the capped rent of €1125 and the higher segment rents.

As a company active in the rental market, we have a vested interest in these developments. The ‘Raad van State’ advisory noted:

"A real risk is that the bill will lead to the sale of rental properties and fewer new rental housing developments. In that case, the supply in the private rental sector will decrease rather than increase, which ultimately does not help people looking for rental homes. It is unclear how this risk will be managed."

The full text/advice is available (in Dutch) at [Raad van State](

We will keep you informed of any further developments and will look at each individual case to assist your employees in the best way possible.

Should any questions arise, please feel free to reach out.