The number of new rental properties added to Dutch housing stock fell 9% last year, when compared with 2020, as the mounting cost of workers and material lead developers to delay projects, ABN Amro said in a new analysis of the Netherlands’ housing market.
While most new rental homes were realised in Amsterdam, the total in the capital was just 2,965, and in Utrecht, only 676 new rental properties came on the market, the survey showed. In the Netherlands as a whole, almost 23,000 new rental properties were added to the supply side.
ABN Amro analyst Casper Wolf says there is a link between the situation in the five Holland Metropole cities and smaller urban conurbations, where the amount of new housing is increasing more rapidly.
‘Rijswijk, Zoeterwoude and Dordrecht all show considerable increases in the amount of new rental property,’ he said. ‘Nieuwegein has become the alternative for people who cannot afford Utrecht.’
Developers, who have been faced with delays and cancelled projects because of efforts to reduce nitrogen-based pollution, are now counting other costs as well, Wolf said. It has become more difficult and expensive to find skilled workers, building material has become more expensive and land prices are also going up.
‘The price of land rose to a record €530 per square metre in the first months of 2022,’ Wolf said. ‘That is up 9.5% on a year ago.’
Government measures, such as the increase in the property transfer tax for investors, are also making developers more reluctant to take the plunge, Wolf said. ‘Government policies that intervene in the housing market plus renewed competition from Airbnb is making investing and renting out in the non rent-controlled sector less attractive, or sometimes even impossible.’
Other measures to help local councils boost the supply of affordable homes are also having an impact. Local authorities are now allowed to designate new developments as ‘owner occupier only’ and Arnhem, for example, has introduced this for properties valued at up to €325,000 in 20 of its 24 residential areas.
Rotterdam has introduced similar regulations in 16 residential areas, with a limit of €355,000.
‘This measure is advantageous to first time buyers but is a problem for people looking to rent in the free sector because investors are staying away,’ Wolf said. Investors are no longer competing with private buyers for cheaper property but this is resulting in fewer rental properties for people who cannot get a mortgage but who earn too much to rent social housing, he said.
All this, says Wolf, means rental prices are likely to rise still further in the short term.
‘If the government’s ambitions to build 100,000 homes a year are achieved, this will probably reduce the pressure on the free sector in the longer term,’ he says.
Last year, landlords operating in the non rent-controlled sector agreed to limit rent rises to the rate of inflation from the previous year plus 1%. This means rents are likely to rise 3.3% this year but could be significantly higher in 2023, because of the current high rate of inflation, the ABN Amro report showed.
However, housing minister Hugo de Jonge said in April that this strategy could lead to problems for tenants, given the soaring rate of inflation, especially when coupled with higher energy bills.
Instead the minister plans to set a maximum increase for so-called free sector rents – properties which are more expensive than the €763 per month social housing sector limit. He already has this right for social housing.
The government has pledged to increase the number of properties for rent outside the social housing sector, particularly mid-market rentals of up to €1,000 per month. Currently, 57% of the Dutch housing stock is owner occupied, 33% is rent controlled and just 9% is available for higher earners who wish to rent.