October 23, 2020

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Highest rent increase in 6 years, especially in Rotterdam and The Hague

Highest rent increase in 6 years, especially in Rotterdam and The Hague

According to the Central Bureau of Statistics (CBS), tenants were paying an average of 2.9 percent more rent as of July 1 of this year than a year earlier. This is the largest increase since 2014. The largest rent increases this year were in Rotterdam and The Hague, where rents rose by 4.1 and 3.6 percent respectively. Prices in Amsterdam rose by an average of 3.5 percent.

The larger increase is mainly due to higher inflation, reports the CBS. The maximum allowable rent increase is tied to inflation: if inflation rises, rents can rise faster. In 2020, this maximum rent increase was 5.1 or 6.6 percent, depending on the income of the tenant.

This year’s inflation rate was 2.6 percent. This means that the real rent increase – the average rent increase minus inflation – was 0.3 percent this year. The real rent increase has not been so low since 2009.

A majority in the Senate wanted the usual rent increase not to take place on July 1 because of the corona crisis, but Interior Minister Ollongren twice denied a request to do so. According to her, a rental freeze was not required and landlords had to help their tenants when they faced financial problems. The Senate then supported a motion of no confidence in the minister, which is very rare.

Social rental housing

Housing companies own 70 percent of all rental properties. They mainly own rental apartments, but also apartments in the private sector. The rents of their social rental apartments rose by an average of 2.7 percent this year. A small portion of the housing associations have postponed the rent increase until later this year. That is around 100,000 households out of a total of 2.3 million.

Aedes, the trade association of housing associations, announced in mid-August that half a percent of tenants in 150 companies surveyed had made use of a payment agreement. According to the housing association, the financial situation of many tenants had improved quickly after the lockdown, for example thanks to state income support. Tenants in the social sector can also apply for housing benefit if they earn less than a certain amount.

Free sector

In the private sector, the average rent rose by 3.0 percent this year. That’s less than in 2019, when rents in the free sector rose by an average of 3.3 percent. According to Laurens van de Noort, director of Vastgoed Belang, its members saw hardly any rent arrears. Approximately 40 percent of the homes of Vastgoed Belang members are in the free sector. Van de Noort believes that the government’s support measures have not resulted in any major rent arrears.

Rents mainly rise when a new resident moves into a rental house. When new tenants take office, the rent rose by an average of 9.5 percent compared to the previous tenant. Last year it was 8.2 percent. Landlords are not bound by a maximum rent increase when a new tenant moves into a house.

“Due to the tense situation on the housing market, you can see that the rent prices of the neighbors in a complex can be very different,” says Peter Hein van Mulligen, chief economist at Statistics Netherlands. “Some people have been renting at a low price for twenty years. If they leave, the rent for new tenants will go up immediately.”

Firmly open every two years

Since 2016, landlords have been able to conclude fixed-term contracts with a term of up to two years. The Woonbond is not happy about that. “This should make it easier to rent out houses and thus increase the supply,” said a spokesman. “In reality, however, this means flexibility for the landlord, who can now arrange new tenants for the property every two years and increase the rent at will. We are seeing this happening a lot.”

Carla Huisman, a researcher at the University of Groningen, previously warned against a silent shift from fixed leases to contracts of no more than two years. According to her, the number of fixed-term leases is increasing, but there is no evidence that more apartments have been added: “You are not waiting for this type of contract, especially in the current tight market. You need to protect consumers. Nowadays it happens a lot in large quantities of cities as a way to stretch rents significantly. “