Criticism of government plan to restrict rents in the private sector | Economy

Criticism of government plan to restrict rents in the private sector | Economy
Criticism of government plan to restrict rents in the private sector | Economy

The government’s plan to limit rental prices in the private sector has major risks. According to the Council of State, an important advisory body, the plan could lead to fewer rental houses.

There are two reasons for this. Firstly, investors could be less interested in new construction because they can earn less from it. Second, landlords may decide to sell their homes, leaving fewer rental properties.

There is currently a major shortage of affordable rental homes, including in the private sector. These are homes with a monthly rent of at least 809 euros. Due to this large shortage, rental prices for these types of homes have risen sharply.

Outgoing Minister Hugo de Jonge (Public Housing) therefore wants stricter rules for how high rents can be. He therefore introduced the Affordable Rent Act. This means that houses in the private sector with a monthly rent of up to 1,123 euros must also fall under the points system.

In this system, homes receive points for various aspects, such as surface area and energy efficiency. This system already applies to social housing, but must therefore be expanded.

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A lot of resistance from builders

There is plenty of resistance to this plan from the housing sector, including from landlords, investors and project developers. Recently, some of the new construction projects have been halted and this is partly due to uncertainty about De Jonge’s measures.

Now the Council of State is issuing advice on this and that is also critical. “There is a real risk that the bill will lead to the sale of rental properties and fewer new-build rental properties. It is unclear how this risk is managed.”

The advisory body understands that the government wants to do something about the problems. But the announced plan does not address the causes of the problems, namely a high demand for rental housing and a small supply. The Council of State advises to look into solving these problems.

Earlier this month it became clear that De Jonge is adjusting his plans somewhat. This means that landlords may charge slightly more rent than in the previous proposal.

In response to the findings of the Council of State, De Jonge writes that the cabinet is already working on measures to provide more houses. He says he is now further preparing the law so that it can soon be submitted to the House of Representatives.

It still has to approve the plans, just like the Senate. It is very questionable whether both of them agree. The VVD and the BBB, among others, are against it. Still, De Jonge is hopeful and insists on introduction in mid-2024.

The article is in Netherlands

Tags: Criticism government plan restrict rents private sector Economy


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