Rental prices free sector are restricted: ‘Unfair to ask 1,500 euros for 40m2’

Minister Hugo de Jonge of Housing.Statue Jiri Büller

Such a system currently only applies to lower rents in social housing, but will also apply to all rents in the middle segment from 2024, up to a rent of 1,000 to 1,250 euros per month. That is what the Minister of Housing says in an interview with de Volkskrant† The latest housing plans will be presented to the House of Representatives on Thursday morning.

The purpose of regulating virtually all rents in the Netherlands is to protect tenants against ‘excesses’. The housing shortage is currently so great that in many places in the Netherlands ‘rents are being asked that are no longer in proportion to the house you get for it’, says De Jonge. According to calculations by his ministry, almost a million Dutch people have such high housing costs that they have too little left each month for ‘minimum living expenses’.

In the coalition agreement, the cabinet promises that the government will work towards ‘an affordable home for everyone, whether you buy or rent’. The real solution for affordable housing is ‘building much more’, acknowledges De Jonge. By 2030, approximately 900,000 additional homes must be built, two-thirds of which must be affordable for people with a low or middle income.

‘But we are not there just like that and in the meantime we have to protect people’, says De Jonge. ‘Because we are increasingly seeing that it is really very difficult for ordinary people with an ordinary job to find an affordable house or to pay their housing costs at the end of the month. Their livelihoods are under pressure. We have to put that on ourselves.’

Is such a major measure as rent regulation necessary?

‘Yes. We do this because we see that the housing shortage has not only brought out something good in people. Many landlords abuse the scarcity to constantly raise rents. That is problematic for many reasons.

‘First of all, you widen the gap between social rent and rents in the middle segment, so that there is much less throughput than you would like.

‘Secondly, people naturally get into trouble because of the high housing costs. There are people who actually need social housing, but who cannot find it or who are on the waiting list for too long. As a result, they are forced to rely on the free sector. They are actually outlawed there, because the landlord can ask what he wants. And that happens a lot.’

In your letter to parliament you refer to ‘unfair practices’. Which?

‘For example, it is unfair to ask 1,500 euros for a house of 40 square meters. And that really doesn’t just happen in Amsterdam. In the capital, the prices are sometimes even higher. The point is that the prices are no longer in any way in proportion to the house that you get for it.

‘Another unfair practice is that the maximum rent of 763 euros for social housing is now sometimes circumvented. Then the landlord comes up to you and says, ‘You know, I can give the house to the neighbors too. But if you want it, shall we agree that you pay more?’ And yes, people sometimes have their backs against the wall. I want to tackle the space that is still available to engage in free contract formation.’

How will the points system work?

‘The points system regulates in a fair way what you can ask for a home. We look at the surface, the facilities in the home, the degree of energy consumption, and the location. This housing valuation system, as it is officially called, already determines the fair price for social housing. We want to more or less copy that system to the mid-market rent. Maximum rents that we are considering are between 1,000 and 1,250 euros, depending on how many points that home has.’

So if you rent a house of 2,000 euros for 40 square meters in The Hague, you can go to the rent committee to negotiate a lower rent?

“That’s exactly how it works, yes. For example, if we set the upper limit of the average rent at 1,200 euros and you think: I pay an absurdly high amount for my home and that is not okay, then you can go to the rent committee.

“But first we need to work out a few things. First of all, we are going to determine the rent up to which we are going to protect: that upper limit will be somewhere between 1,000 and 1,250 euros.

‘Secondly, we are still investigating what surcharge percentage on top of the maximum rent is required for certain investors. After all, we must ensure that institutional investors, such as pension funds, remain willing to build rental housing for the middle segment. Otherwise you will soon have a perfectly regulated market, but nobody wants to build those homes anymore because it is no longer financially attractive.’

But in principle it will no longer be possible to pay a rent of 2,000 or 3,000 euros to a private landlord?

‘That is only possible if the house scores so many points that it no longer falls into the middle segment. The current limit is 763 euros if the house scores 144 points. If we extend that to the middle segment, you will soon pay 1,000 euros for a house with 187 points and 1,250 euros for 232 points.

‘If we decide to regulate the rental market to 1,250 euros, I think you will have more than 90 percent of the rental properties. So almost all houses. This means that many homes that are currently unaffordable will be withdrawn back to the middle segment.

“One way to enforce it would be that anyone who wants to rent out would have to apply for a permit. Then it is tested what the maximum rent may be. The core is that the price for a home is just fair. It often isn’t now.’

Is this legally tenable? Are you going to determine for private parties how much rent they may ask for their own home?

‘It is true that this affects the right to property and the freedom of people to ask for what they want for their home. But we do that for a very good reason. As long as we can argue that it’s necessary because of scarcity, I think it’s possible.

‘We will have to change the law for this. My aim is for the bill to be submitted at the end of this year and for the new rules to come into effect in January 2024.’

Will this only apply to new leases or to existing ones as well?

‘We are exploring the legal scope to intervene in new, but also in current leases. In any case, the new rules will apply when a tenant changes. As soon as a rental property becomes available. What still happens too much: that tenants each time receive an annual contract and that the owner raises the rent sharply again with the new tenant. We must get rid of these excesses.’

All those people who have now bought one or two houses to earn a lot of rent will not be happy with you.

‘I wouldn’t mind if people who buy up properties and charge excessively high rents say, ‘Now the fun is gone for me. Let me start selling again. I would be fine with that, because it would make a home available again for buyers who are going to live in it.

‘The whole phenomenon buy to letbuying houses to rent out for far too high prices, that really has to stop.’