Government agrees on rental sector reforms

The government has approved reforms to the rental housing sector proposed by the Minister for Housing, Stef Blok. The measures will promote movement in the housing market and improve the supply of rental housing in both the social sector and the deregulated sector.

Housing associations will be affected in a number of ways. They will be required to concentrate on providing homes for people on lower incomes, they will be subject to stricter supervision, and municipalities will be able to make binding performance agreements with them on local requirements and possibilities. They will also have to carry out more thorough checks of whether a potential tenant can afford the rent of a given dwelling.

The stricter definition of their remit will ensure that losses on project development operations do not prevent housing associations from performing their core task, i.e. providing housing for lower income groups. The increased emphasis on housing associations’ core task will also be conducive to fairer competition. It will be more attractive to invest in rental dwellings in the medium price bracket, for which the demand is high.

Subject to strict safeguards, housing associations will still be able to invest in homes for people on higher incomes in the context of urban and village redevelopment, provided this has a beneficial impact on the fulfilment of their core task.

The income limit for social housing will be temporarily raised (for 5 years). Besides the current option of assigning 10% of the housing stock to people earning more than €34,000, there will be an additional 10% for the category €34,000 to €38,000. This measure, which complies with EU conditions, implements the parliamentary motion tabled by Jacques Monasch.

Temporary leases

The government also plans to increase the scope for offering temporary leases. This will encourage potential lessors to let property because they will have the certainty that the lease will end after a fixed period. As a result, certain categories of prospective tenants will be able to find an affordable home more quickly.

Temporary leases of up to 2 years will be introduced, as well as leases for first-time tenants under 30 for a maximum of 5 years. Besides leases for specific categories of people like students (these leases already exist) and PhD researchers (to be introduced), it will be possible to designate homes for specific groups such as large families.

Housing valuation system

The housing valuation system will become more market-oriented, with the location of social housing being better reflected in the maximum permitted rent. The value of a home as assessed under the Valuation of Immovable Property Act will count for around 25% in the calculation. The aim is to introduce the new system in mid-2015. The new rules will replace the existing mechanism (Donnerpunten) for taking account of the shortage of homes in certain areas to a limited extent.

Deregulation threshold

The rental threshold marking the transition from the social housing sector to the deregulated housing sector will be frozen for 3 years at €699.48. However, rents may rise above this threshold due to annual increases if the points total under the valuation system permits.