You want to rent out a property, preferably without too many headaches ánd you are looking for a good reliable tenant. Where to start.
There is more to renting out a property than meets the eye. One of the first things that is important is whether you are allowed to rent out the property. Is there a mortgage on the property or is the property free of mortgage. If it is an apartment with a VVE, the bylaws may contain a rental prohibition. These are the first things you should look at as a (potential) landlord.
During the rental process come the following 10 issues;
1. Am I allowed to rent out my property?
It is important to get the rental process right from the start. If the property is fully owned (there is no mortgage on the property) then you do not need permission to rent it out. If there is a mortgage on the property, it is important that you indicate your rental plans to the mortgage lender. Play straight with the mortgage lender, they deal with renting out a property differently. There are mortgage lenders who see rentals as a risk and will only give permission if certain rental agreements are used that are reviewed by the mortgage lender itself.
2. Contact the association
If you want to rent out an apartment, it is a good idea to check the rules of the condominium association. If the subdivision deed explicitly states that you are not allowed to (sub)rent out the property, you should ask whether this concerns short term rentals such as through Airbnb. In general, longer rental of your property is possible. However, it is wise to report the rental of your property to your home owners association. The tenant may be required to sign a set of internal regulations.
3. Consider the tax consequences
If you rent out a property there are some tax rules. A mortgage for an owner-occupied home falls into box 1 (work and home). Once the home is rented out, the mortgage interest is no longer deductible and the value of the home falls into box 3 (assets). You then pay capital gains tax on the excess value. In most cases, the financial consideration of whether or not to rent is not very exciting because the rental income remains a financially attractive option in most cases. Want to know more about box 1 and box 3?
4. Engage a rental specialist
Renting out a property is a profession! Not all real estate agents have the right knowledge to rent out a property. Therefore, choose a real estate agent who specializes in renting out homes. The rental industry is constantly changing, rental rules change every so often hence, as a real estate agent, you must constantly keep up to date with changing rental agreements and rental options. A small mistake in a rental agreement can have major consequences.
5. What rent can I charge?
That depends on a number of factors. First, it is tested whether the property is a free sector property. The rental market in the Netherlands is regulated so that tenants are protected. The Housing Rating System (WWS) determines whether a property may be rented in the free sector. The WWS looks at certain characteristics of a property such as energy efficiency, WOZ value, number of m2 etc. If the house scores at least 136 points, as a landlord you are not bound to the recommended retail price (€ 808,06) for the number of points scored. You may then ask for a market-level rent. From January 2024, there is a good chance that this limit will be raised to 187 points, which will then correspond to a rental price of € 1100,-.
6. Prevent housing discrimination
Once you have chosen a rental agent make sure that a procedure is in place aimed at preventing housing discrimination. The broker should have a transparent selection procedure with non-discriminatory selection criteria. In the selection procedure, the real estate agent may not take into account or ask about religious identity, origin or sexual orientation, among other things. More about housing discrimination/ good landlord practices
7. Select the right tenant
You should expect the broker to properly screen interested candidates before introducing them as potential new tenants. Salary slips and employment contract are checked and verified with the employer. It is also important to get acquainted with the tenant. A potential tenant may look good on paper but it is also important to get acquainted so that you get a good impression.
8. Do you choose a long or short contract?
This is a subject that has been the subject of much debate this year. As it looks now, from July 1, 2024 it will no longer be possible to conclude temporary rental agreements, with exceptions. Until then, it is possible to enter into a rental agreement of a temporary nature, this can be a period of a few months (usually 6 or 12 months) up to a maximum of 24 months. The advantage is that you as a landlord are sure again that the tenant leaves after this period, you can terminate the agreement, without giving any reason. The tenant can, however, terminate the agreement with a notice period of one calendar month. The other option is to enter into a contract with a minimum period that continues indefinitely. Most investors do not want too many rent changes hence this option is usually chosen by landlords who want to rent for a long period of time.
9. Make sure the property is delivered properly
We wish tenants a good start. A new and exciting period often begins for a tenant. Often related to a new position, in a new country. A nice house is therefore very important. Therefore, ensure a good delivery. A house should be handed over clean and any defects should be remedied before the key is handed over. When the property is furnished, it should be handed over "ready to live". In this case a tenant only takes a suitcase with clothes and expects everything in the house to be present. This includes made beds, enough cutlery, towels and linens etc. When handing over the keys, make sure that the tenant receives at least 2 sets of keys. It is also useful to leave behind manuals of appliances (washing machine, dishwasher, oven).
10. Keep in touch with the tenant
We advise landlords to keep in touch with the tenant. It is appreciated to contact the tenant after the first month. Just to check whether everything is ok.
