4-11-2021 —
As we wrote on July 19 various municipalities including Amsterdam and Haarlem want to keep property investors, who buy homes to rent out, off the housing market as much as possible. As a result of a change in the law, as of 1 January 2022 municipalities may designate neighbourhoods or districts that fall under self occupancy obligation. If ‘protected homes’ there change hands, the new owner may not rent out the home for the first four years. This will exclude investors and the homes will only be attractive to people who are going to live there themselves.
Previously, a self occupancy obligation was introduced for new construction. Now they want to do the same for existing homes by introducing a self occupancy obligation a.s.a.p. for the entire city. Investors in Amsterdam will then no longer be allowed to buy and rent out houses with a WOZ value of less than € 512,000. In Haarlem a limit of € 389,000 applies. Other municipalities will undoubtedly follow and set their own limits.
Meanwhile, almost 8.5% of the homes in the Netherlands are owned by investors. In the four major cities, a quarter of the homes offered for sale in recent years were purchased by investors. With the current housing stock, 6 out of 10 Amsterdam homes will soon fall under self occupancy obligation. Whoever buys such a house may not rent it out during the first four years. The Amsterdam city council will vote on the plan in February. Haarlem wants to implement the plan as of 1 January 2022.
Exceptions
There are some exceptions in the law:
• If a house was already a rental property, it may remain a rental property. So it concerns existing homes that are bought after the effective date of the law change. To prevent a house from being quickly rented out and then sold as a rental property, a house must have been rented out for at least six months before the sale in order to remain a rental property.
• In addition, homes may still be rented out to family members such as children, grandchildren, brothers and sisters.
• Temporary rentals, for example to stay abroad, are also allowed. Provided that the landlord has lived in the house himself for at least 1 year.
• Houses that are inextricably linked to business premises, offices or stores may also be rented out.
For these exceptions, a rental permit must be applied for from the municipality. Even if the landlord is allowed to rent out a purchased property by means of a permit, municipalities have the authority to impose requirements in the context of good landlord practices. If a landlord does not comply with these requirements, the municipality can, in extreme cases, revoke the permit.
Is this allowed just like that?
The regulation is only intended for areas where there is a housing shortage and nuisance. The change in the law requires municipalities to substantiate ‘whether and in which neighbourhoods there are unbalanced and unjust effects due to scarcity of cheap and medium-priced housing’. Municipalities must also substantiate that the measure is 'necessary and effective'.
We still have our doubts whether this is legally feasible because Amsterdam and Haarlem simply draw the line at a certain WOZ value, they do not look at each neighbourhood, or whether there is nuisance, etc.
Is this bad news?
For those who were still planning to buy one or more properties to rent out in the big cities, this is bad news. After all, in large cities relatively small (and therefore cheaper) properties yield the highest returns, although that is also likely to change.
For those who already own homes, this is actually good news. After all, the government is creating even more scarcity of rental houses, so that the rents of homes that can still be rented out can only go one way: up! But this is of course very bad news for tenants, because they will ultimately pay the consequences of this symbolic policy. Precisely the group that the government, in addition to starters, so desperately wants to protect will therefore suffer the painful consequences of this. Especially now that the supply of rental housing is decreasing, expats and international students are arriving in abundance again and many potential buyers are now also relying on a rental property in the free sector due to the high purchase prices.
If we focus on Amsterdam that wants to set a limit of € 512,000, this measure mainly affects ‘the cheaper’ city districts and smaller homes. But with the next expected measure to have the WOZ only count for 1/3 in the point system, buying a small property for rent was no longer a good plan anyway.
A house of a reasonable size in expensive districts such as Centre and South anyway has a WOZ_value higher than € 512,000.00. So investors will just continue to buy there. In addition, investors will start to buy in surrounding municipalities, which do not introduce a self occupancy obligation. This in turn creates a waterbed effect.
Housing shortage remains, tenants pay the price
This is now yet another example of symbolic politics that will only solve little. The housing shortage, which the government itself can do something about by building much more houses, will remain. Of course, this will indeed mean that more homes will be sold to 'ordinary people'. So it will probably work out well for them. But the already very small share of free-sector rental houses will only get smaller. And thus the prices will be higher. Where are all those people going to live who can't or don't want to buy, or who come here as expats, migrant workers or international students? The self occupancy obligation does not offer a structural solution for the scarcity of (owner-occupied) homes. It simply shifts the problem from buyers to renters. According to the minister, approximately 7,500 transactions per year remain that fall under the self occupancy obligation and do not enter the buy-to-let market. So, with a housing challenge of 845,000 homes between 2020 and 2030 and 75,000 homes per year, very little will change about the current housing shortage.
How can you get around the self occupancy requirement if you do want to buy a property for rent?
• Buy a property for rent before January 1, 2022, or whatever other date the municipality uses as the effective date. This refers to the date in the deed of transfer.
• Buy a property in a municipality where there is no self occupancy obligation. Since Covid-19 there has been a migration from the city to surrounding municipalities or even the countryside. Actually, there is a shortage of rental housing almost everywhere in the Netherlands. But always do some good research into the possibilities.
• Buy a property that is currently already rented. If the lease is older than 6 months, it may continue to be rented.
• Buy a house for a family member, f.i. a studying child. After 4 years you may start renting it out to a non-family member.
• Buy yourself another house to live in and rent out your own.
• Buy a house with a WOZ-value that is higher than the lower limit set by the municipality.
• Buy a leisure house.
Please note that the permit is personal. If a property purchased under self occupancy obligation has been rented out with a permit, the permit will not automatically pass to the new owner of the property upon resale.
Update March 2022: The buy-out protection will take effect April 1, 2022.
Picture of Richard Duijnstee via Pixabay
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