Government policy

Regulations governing the private rental sector

In response to reduced affordability, the Dutch government introduced policy on a national level at the beginning of 2021 aimed at improving the affordability of housing. The measures that impact the private sector rental market are clearly visible in the table below.

Although regulation should make housing affordable in theory, the downside is that the underlying issues are not resolved and there is still an imbalance in supply and demand. The threat of further regulation has also reduced the financial feasibility of new-build projects, making it difficult to grow the supply. One example of this is the limiting of the WOZ value in the WWS points system, which may force deregulated units with lower points in locations with a high WOZ value back into the regulated segment. This could also apply to new-build homes. In locations with higher land prices and building costs, the feasibility of new-build projects comes under pressure as a result.

In addition to regulation on a national level, local governments may also place demands on the new-build programmes in a specific urban development. On a local level, restrictions concerning developments can be laid down in the deed creating a ground lease.

A reduction of the transfer tax for starters and an increase of this tax for investors should also make owner-occupied homes more affordable in theory. However, in May 2021, owner-occupied homes were 12.9% more expensive than in May 2020, while the impact on the residential investment market was considerable as a result.

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Investment market: Increase in transfer tax mainly increases demand for new-builds

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