The housing market in the Netherlands has been under considerable pressure in recent years, mainly due to rising rents and a shortage of affordable rental housing. To address this problem, several measures have been introduced by the government, including the revision of the Affordable Rent Act. This law aims to make rental housing more accessible and affordable for tenants, and has important implications for leases that were previously below the liberalisation threshold. We are happy to bring you up to date on the implications of this law for landlords and tenants.
The Affordable Rent Act and the liberalisation threshold
The liberalisation limit refers to the limit at which a property is rented out freely, without being bound by the maximum rents resulting from the point system. New rules apply to houses that initially fell below the liberalisation limit, but were rented at a higher, market-based rent. From 1 July 2024, you will need 187 points to rent in the free sector. The core of the new legislation states that if a rental property did not meet the required point system but was still rented out at a high rent, the landlord must reduce the rent before 1 January 2025. This means that homes, even if they had a higher rent when the lease was entered into, still fall under the protection of the Affordable Rent Act!
The point system and its role
The point system is an essential part of Dutch rental policy. The system assesses the quality of a property based on various factors such as surface area, amenities (e.g. quality central heating system, double glazing, insulation) and location. Based on the number of points a house scores, the maximum allowable rent is determined. Houses with less than 143 points fall under the regulation of the Affordable Rent Act. This means that landlords must adjust their rents if their property does not meet this point requirement, regardless of whether the rent was previously above the liberalisation limit.
An example to clarify: suppose you rented out a property with 138 points in 2023, for which you charged a market rent. If that same property still has less than 144 points on 1 July 2024, as a landlord you will fall under the rules of the Affordable Rent Act. This means you may have to reduce the rent so that it is in line with the point count and the maximum allowable rent.
Penalties and mandatory point count on new contracts
From 1 January 2025, landlords will be more strictly monitored for compliance with the new rules. Landlords who fail to adjust their rents to the point count in time can expect fines imposed by the municipality. This underlines the importance for landlords to be aware of the new regulations and ensure that their leases comply with the Affordable Rent Act. In addition, from 1 January 2025, landlords will have to attach a point score of the property when entering into new leases. This obligation provides more transparency for tenants, as they will know in advance what the maximum rent of the property is.
Conclusion
The revision of the Affordable Rent Act has far-reaching implications, for both landlords and tenants. Houses that do not comply with the point count and are nevertheless rented at a higher rent must be brought in line with the regulations in the short term. It is essential for landlords to be aware of their property's point count and anticipate the changes will take effect from 1 January 2025.
Landlords would do well to familiarize themselves with the new rules and check their property's point score in time to avoid surprises.
