Analysis

Savills’ analysis of the geographical implications of the planned regulations

Different kinds of approaches can be used to determine where the impact of the new regulations will be greatest.

For instance, where the overall rental prices fall the most, or where the total number of houses falling into the regulated system is the largest. The most relevant metric is the first, however, as the aim of these regulations is to improve the affordability of the housing stock. In locations where the change in rental price makes little overall difference, the regulations will have little effect.

The recently introduced WOZ weighting cap will clearly have a strong influence on the ‘where’ question. The WOZ value can now account for no more than 33% of the overall WWS points. As a result, the consequence of this is that falls in monthly rental prices are much more likely to occur at locations having high WOZ values. A house’s high WOZ value will therefore count less towards a point score above that required for its rental in the unregulated sector. Whether this will be retained in the new Programme is open to question.

The likelihood of a rental downfall also depends on the surface area of the dwelling. For a larger dwelling, the WWS point score may remain above that required for its rental in the unregulated sector; or the WWS point score of an existing dwelling could be raised above this threshold by upgrading its facilities. This is much less true for smaller dwellings. Finally, these regulations will have a limited effect on the affordability of houses in locations where the actual share of rental housing is very low.

An above-average WOZ value, an above-average share of rental housing, and a below-average surface area of dwellings (all considered at the district level) will therefore lead to a greater impact.

By considering these three indicators – the WOZ value per sq. m., the average living space in sq. m. and the % of rental dwellings at the district level – Savills has calculated a total score, based on Z scores for each indicator. A Z score indicates how much a value differs from the average. The WOZ value per sq. m. and the rental share give rise to a higher Z score when a district scores above average; while a lower than average living area (at district level) also leads to a higher Z score.

Map The impact of expanding the WWS points system will be greatest in the Randstad and Brabant areas of urban concentration

The most impact

The map above shows, on the basis of this overall score, where expanding the WWS points system is predicted to have the most impact. Logically, the impact is greatest in the most urban areas of the Netherlands; these generally have a larger share of rental housing, a higher WOZ value per sq. m., and smaller average house sizes. So a downturn from the unregulated sector to the regulated sector is much more probable in the Randstad conurbation, the Brabant urban strip, and large regional cities like Groningen, Zwolle, Maastricht, Arnhem and Nijmegen.

The least impact

A very different picture is seen in the border regions of Limburg, Drenthe, Groningen, Zeeuws-Vlaanderen, North Friesland and the Achterhoek in the south-east. These areas are characterised by larger houses, lower WOZ values, and a much lower proportion of rental properties in the total housing stock. They are also regions in which the share of rental properties owned by private landlords, rather than housing corporations, is small compared to the country’s urban areas. Moreover, it is also possible that the rental market in these regions has developed less markedly than has been the case in the Randstad conurbation, for instance. The effect of the 33% WOZ cap, in particular, will be that re-let rental prices will fall markedly. This means that, from a national perspective, comparable dwellings falling into the newly regulated sector will be geographically more proximate. Since rental prices will then be more similar, this could also mean that more people will choose to move to urban areas – with rising demand as the result.

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