Today, we’re delving deep into the proposed Affordable Rent Bill, a legislative game-changer set to reshape the housing scene in 2024. Get ready for an in-depth exploration of the three pivotal components designed to safeguard tenants.

1. Expansion of Rental Price Protection

Presently, approximately 2.5 million rental properties benefit from rental price protection, mainly in the lower or social rental segment. A points system, the so-called housing valuation system (WWS), determines the housing quality and the maximum rental price. Does a home have approximately 148 points? Then the maximum (social) rent of approximately €808 per month is reached. These homes are often offered by social housing associations. All rental properties with a rent of more than €808 (148 points) are so-called private sector properties. There is no maximum rental price for this. The proposal is to include rental properties up to 186 WWS points under rental price protection. With 186 points comes a maximum rent of approximately € 1,123 (price level July 2023).

How many properties would fall under the category of capped rental price?

There are approximately 650,000 private sector rental properties and it is estimated that approximately 300,000 of these will fall under this regulation. Majority of rental properties in Amsterdam will fall under this regulation. Under this proposed expansion, properties with up to 186 WWS points will fall under a new category termed ‘middle rent.’

2. Compulsory Rental Price and Modernized Points System

In a bid to ensure adherence to maximum WWS rental prices, the bill takes a bold step by making the WWS system mandatory for all tenants and landlords. This crucial regulation, applicable to new rental contracts, seeks to prevent tenants from shouldering exorbitant rents. Simultaneously, the points system undergoes a thorough modernization process including:

Limiting the number of points based on the WOZ value.

Homes with a high WOZ value quickly fall into the private rental sector. That is why the WOZ value from 187 points may only account for a maximum of 33% of the total number of points. A high WOZ value therefore yields far fewer points.

To encourage sustainability towards a better energy label.

Good energy labels are valued much higher in points than in the current system. Bad labels (E, F, G) receive deductions.

An outdoor space gets more points.

The annual rent increase will be linked to the collective labor agreement wage development.

3. Consequences for the Housing Market and Investors

While the bill anticipates increased sustainability and affordability, it hasn’t escaped the watchful eye of investors. Some express concerns about potential drops in rental yields, with expectations of yield decreases, particularly in cities like Amsterdam. Investors may strategize ways to increase WWS points, such as enhancing sustainability or expanding living spaces or decide to sell properties if they can no longer get a return on their investment. As a result of the announcement of this bill the number of rental properties on the Amsterdam market has dramatically decreased.

Introduction in 2024?

Minister De Jonge was steering the ship to roll out the Affordable Rent Bill in 2024. Currently awaiting approval by the Council of State, the bill has earned a non-controversial status in the House of Representatives. If approved, it heads for a vote in the House. Post-election, the new House of Representatives will discuss and determine the fate of this transformative bill.

As we keep a close eye on the Affordable Rent Bill’s journey, stay tuned for updates on how this comprehensive reform could reshape the rental landscape in 2024. DO you have any questions of comments about this article? Please contact us!