In the Netherlands, it is common for tenants in the free sector to face rent increases. Free sector rental properties fall outside the regulated rental sector and are therefore not subject to the strict rules that apply to social rental properties. But how exactly does such a rent increase work? What are the legal frameworks and what should both tenants and landlords take into account?
What is the Free Sector?
The free sector refers to rental properties with a monthly rent above the liberalisation threshold, which in 2024 is €879.66. These properties are not covered by the rent subsidy and have more freedom in determining the rent and annual rent increase. To qualify for the free sector, a property must have a minimum of 148 points. It is likely that the housing valuation system (WWS) will be changed by July 2024.
Legal Rules for Rent Increase
Although the free sector offers more freedom than the social rented sector, there are still some rules that landlords must adhere to when increasing rent:
1. Contractual Agreement: The conditions for rent increases are usually set out in the rental contract. This may agree, for example, that the rent will be increased by a certain percentage each year.
2. Inflation and Market Conditions: Rent increases are often linked to inflation or market rent. This means that the increase may vary depending on economic conditions.
3. Deadline and Notification: As you might not expect, there is no deadline for timely notification of a rent increase in free sector rentals. A first rent increase can only take place after 12 months and there should be a minimum of 12 months between a subsequent rent increase. If it concerns a regulated rental property, as a landlord you must give a tenant at least two months' written notice of the rent increase.
Maximum rent increase
For the next five years, until at least 1 May 2029, the central government has capped the percentage for the annual rent increase. This year, a maximum percentage of 5.5% applies to free-sector housing.
The rent increase may only be implemented if there is an indexation clause in the rental contract or in the general provisions.
For social rented housing, this maximum percentage is 5.8% if the basic rent is at least €300.00 or more. For social housing, the amount of the rent increase also depends on the tenant's income.
Objecting
Tenants have the right to object to a rent increase if they find it unreasonable. This objection must be submitted to the landlord within six weeks of the announcement of the increase. If the parties cannot come to a mutual agreement, the matter can be submitted to the Rent Commission.
Consequences for Tenants and Landlords
For tenants, a rent increase often means a higher monthly burden, which can affect their financial situation. For landlords, it is important to consider rent increases carefully, as unreasonable increases can lead to vacancies or legal disputes.
Conclusion
A rent increase in the freehold sector is a normal phenomenon, but both tenants and landlords should be aware of their rights and obligations. By being well informed and communicating openly, many disputes can be avoided. It is essential to know the rules and agreements well to avoid unexpected surprises.
Do you have questions about rent increases or other rent-related issues? Let us know in the comments or contact a legal adviser for personalised advice.
