On 23 March of this year, the Dutch Senate adopted the new "Act on the limitation of rent increases in liberalised rental agreements". What does this new law entail?
Currently, unlike social housing, no maximum rent increase applies to non-regulated rental properties. The law means that in the next three years, rent prices in the liberalised/freestanding sector may rise by no more than the level of inflation plus one percent. Article 7:248 of the Dutch Civil Code and Article 10 of the Rent (Rates) Implementation Act will be amended accordingly.
The liberalisation threshold for 2021 has been set at €752.33. Houses rented out for a higher price are in the free sector.
The intention is to protect the affordability of these rental properties. The ceiling is intended to ensure that the free sector rental homes remain accessible to first-time buyers and middle-income households. In this way, tenants in the free sector know where they stand and are not (unexpectedly) confronted with large rent increases.
The new law will apply to new and existing rental agreements. Existing rental agreements in which a higher indexation percentage has been agreed upon will be null and void under the new law.
The new law does not only regulate a limited increase of the rent. Also new is that tenants of rental properties in the free sector can go to the Rent Commission if there is a dispute with the landlord about the rent increase. This route was previously only open to tenants of social housing.
It remains to be seen whether the intended objective will be achieved by applying the rent cap. For example, the point system for calculating the maximum rental price does not apply to houses in the free sector.
Landlords have the option of asking for a higher initial rental price. Given the tightness in the housing market, many tenants will be willing to pay a higher rent. Landlords may also be stimulated by this new law to enter into more temporary rental agreements. As a result, the property can be rented out for a higher price each time. This could cause more unrest on the tenants' market and thus have a counterproductive effect.
It is not yet known when the new law will enter into force.
Should you have any questions, please do not hesitate to contact one of our lawyers. We will keep you informed of further developments!