What will happen to the Dutch housing market from the first of July 2024?

The housing shortage in the Netherlands has been an issue for several years due to the high demand and low supply. Although the number of houses has increased in the past decade the number of households looking for a home has grown significantly faster. Therefore the cost of buying and renting a house has become prohibitively expensive, especially in high demand areas like Amsterdam and Den Haag. The Dutch government has come up with several policies to curb this problem.

The Wet Vaste Huurcontracten was approved by the Dutch senate on the 14th of november 2023 and was published on the first of December 2023. It will be implemented on the first of July 2024. It means that the rental contracts in the Netherlands would be valid for an indefinite amount of time, whereas contracts were previously allowed to have a predefined end date, usually 2 to 5 years. Another law, the Wet Betaalbare Huur which passed on the 25th of June, is a law that aims to make renting more affordable, especially for middle-income earners. The goal of this law is to strengthen renters' rights by making rent control mandatory and to increase transparency and prevent excessive rents. The law expands the point system to determine maximum rent and will be enforced from July 1st 2024. Municipalities will have extra time (possibly until 1st January 2024 to prepare for implementing the new rules).

The Dutch housing market is potentially in for a shakeup with the implementation of these two new laws. On one hand, renters will benefit from increased security. The Wet Vaste Huurcontracten grants indefinite rental contracts, reducing the risk of eviction and potentially leading to a more stable housing market. Additionally, the Wet Betaalbare Huur, with its rent control measures and point system, could bring down rents in the mid-range and social housing sectors, making it more affordable for middle-income earners. However, these changes might come at a cost. Landlords unhappy with the regulations may choose to sell their properties, tightening the already limited rental market availability. The true impact on the market depends on how landlords react to the new laws.

Market analysts say the landlords may sell their properties if they feel that the renting market is less profitable for them because of these laws. While this may increase the supply of properties for sale in the short run, it reduces the number of rooms for rent in the housing market in the long run. Some analysts postulate that it could worsen the renting market significantly if enough landlords get spooked by the ramification of these laws. It remains to be seen if these stricter laws would significantly affect investors’ ROI enough to force them to sell.

On the buyers side of the housing market, those looking to buy a new house may be favoured in the short run if landlords sell. Unfortunately, these laws do not actually address the main issue of the lack of supply of not just affordable housing, but housing in the Netherlands. It may be possible, coupled with the recent drop in mortgage interest rates, for desperate buyers to take advantage of landlords’ adverse reaction to these laws and purchase these houses that go on the market.

On the renters’ side, the sale of the houses by landlords reduces the available rental properties potentially making it harder for renters to find affordable housing. This may drive renters to seek higher priced apartments, further worsening the renting markets. Those who are able to get affordable housing under these new laws will have contracts with no pre-defined end date and potentially lower rents. This reduces the risk of eviction and provides more stability for tenants to save up for a house in the future.

Market analysts say the landlords may sell their properties if they feel that the renting market is less profitable for them because of these laws. While this may increase the supply of properties for sale in the short run, it reduces the number of rooms for rent in the housing market in the long run. Some analysts postulate that it could worsen the renting market significantly if enough landlords get spooked by the ramification of these laws. It remains to be seen if these stricter laws would significantly affect investors’ ROI enough to force them to sell.