Affordable housing is one of the most basic necessities of life. Yet in recent years, fewer and fewer people have been able to access it. Tightness in the housing market, rising rents and temporary leases have weakened the position of tenants. Now the tide is turning. Bad news for landlords? Not if you are prepared. The main trends are explained below.
In recent years, the number of affordable homes for middle-income earners, especially in cities, has fallen sharply. The housing shortage has driven up prices, so that houses that used to be just above the rent benefit limit are now well above it. Moreover, rental properties used to be hardly taxed at all, allowing landlords to make a hefty profit. To keep middle-income earners (e.g. teachers, nurses and police officers) living in the cities, the government has decided to introduce mid-level rent control.
The points system, already in use today for social rented housing, is also set to apply to mid-segment rental housing from 1 January 2024. These are properties that score between 142 points (the upper limit for social housing) and around 187 points, representing rents up to around EUR 1,200. In addition, rental income will be taxed more heavily and the government will step up enforcement.
What if the landlord is still charging too much rent? They will be fined. This makes it more risky for landlords to charge excessive rents, especially when you consider that the Landlord Act (see trend 3) allows municipalities to introduce a licensing requirement. And municipalities may refuse a rental licence because of a previous fine or revoke it if the landlord fails to act as a good landlord.
It seemed like a great idea. The introduction of the “Rental Market Mobility Act” would make part of the market more flexible. It would be convenient for those who wanted to rent out their homes temporarily or for self-employed people who moved from one side of the country to the other for a temporary job. Only a small proportion of landlords would make use of the law, it was thought. After all, if you want to rent for the long term and have found a reliable tenant, you would rather not let them go. Right?
A naive thought? Perhaps. In any case, landlords are taking wholesale advantage of the opportunity to rent out their properties on a temporary lease for up to 2 years (up to 5 years for non-self-contained accommodation). The tight housing market means they are never without a tenant. Their power is as great as the tenant’s stress and uncertainty. The high turnover of residents puts the quality of life in neighbourhoods under pressure. And so a different tune is now being played.
To calm the market down again, the Dutch House of Representatives passed the bill for the “Fixed Leases Act” by a majority, which is, in practice, a return to the situation before the Rental Market Mobility Act. This means that temporary rentals are now only allowed under strict conditions for specific target groups. Other leases are basically open-ended. The relationship between tenant and landlord becomes more enduring again: the tenants are better protected, while landlords have to focus their thoughts on the long term as before.
If the Senate also approves the Fixed Leases Act, temporary rentals for up to 2 years will still be allowed for specific categories of tenants, including:
The exemptions from the Fixed Leases Act will be set out in a new regulation.
And then there are a number of other types of temporary arrangement. This option applies:
A good landlord charges a reasonable rent, does not engage in illegal practices, and provides adequate maintenance and a healthy and safe indoor environment. No extortionate prices, no mould in the bedrooms and no discrimination or intimidation. That’s only logical, you might think, but real life shows otherwise. The Dutch government therefore felt it necessary to further define the framework of standards governing landlords’ behaviour.
The “Good Landlord Act” is intended to prevent excesses and, again, protect tenants. The act includes more measurable, actionable and enforceable standards of behaviour for residential landlords, such as a transparent selection procedure or a written rental agreement, or a duty to inform tenants about where to seek information about the tenancy relationship.
Is the quality of life in a neighbourhood under pressure as a result of landlords’ rental practices? If so, the municipality can introduce a licensing requirement for landlords. Landlords who contravene the Good Landlord Act can expect a fine of up to EUR 22,500, rising to EUR 90,000 for multiple offences. This creates a firmer legal basis for municipalities to act against malpractices and makes it easier for tenants to seek justice. Landlords who behave properly need not worry about the Good Landlord Act.
In cases of substantial rent arrears, nuisance or crime, a court may decide to evict tenants from their homes. In recent years, we have seen judges becoming increasingly cautious in this regard. The social interest is given greater weight, especially when children are involved. The childcare benefits scandal has reinforced this trend, with judges rather regretting the harsh judgements handed down at the time.
Moreover, the right to housing is a human right. The government therefore has a duty to better protect tenants’ human and children’s rights, the National Ombudsman and the Children’s Ombudsman believe. In recent years, the government has already taken steps in the right direction, such as early detection of late payments. But there is room for improvement, e.g. by providing a human and child rights test before evictions, or by facilitating replacement housing.
As a landlord, it’s a smart move to take this development into account. Offer or describe a specific alternative where tenants can go after a forced eviction, such as a temporary social shelter. And join forces with the municipality and civil-society organisations to initiate that process promptly. This helps a judge consider whether or not a tenant should be evicted.
All in all, the trend is clear: social interest is being given a louder voice in the housing rental market. For a good landlord, this is no reason to panic. Housing rentals are still profitable in the long run. And those who behave in line with generally accepted social standards need not fear any fines or the powers of municipalities. However, it’s important to take an even more proactive role with tenants who don’t pay their rent, cause nuisance or engage in criminal activities in your property. Seek help early, start keeping a record at an early stage and show that you are fulfilling your role as a landlord responsibly.
If you would like to know more about developments in the rental housing market or get help preparing for changes, please contact Harm Heynen or Luc Golsteijn.
