Investing in the rental market
The Dutch rental market offers several opportunities for private investors. Especially the non-regulated rental market is expected to become one of the fastest growing segments.
Regulated and non-regulated sector
The Dutch rental market makes up about 40% of the total housing market. It consists of:
regulated dwellingsThe regulated sector (2.3 mln homes, 80% of the total rental stock) provides lower income households with affordable housing. Rents are determined by the government. Households beneath a certain income may apply for a rental housing allowance provided by the central government. Social housing associations are the main suppliers of regulated rental homes. They are private institutions, but have to abide by special government regulations regarding their investments and finances.
non-regulated dwellingsThe non-regulated sector (0,6 mln homes, 20% of the total rental stock) serves middle- and higher income households. Rent-setting is free. Non-regulated housing stock can be newly developed, or acquired from existing private investors or social housing associations.
Opportunities in non-regulated rental market
The non-regulated rental market in particular is expected to become one of the fastest growing segments of the housing market. This is a result of three trends:
- An increasingly flexible labour market fuels demand from middle and higher incomes for rental housing.
- More and more elderly people opt for a high-end rental homes, like a luxury villa rental.
- Government policy reforms boosting non-regulated rental housing.
Demand and supply in the rental market
Government policies for the rental market
The government is taking steps to increase diversity in rental supply. The following measures have been taken:
- Raising rents in the regulated sector closer to market levels;
- Limiting the scope of activities of the social housing associations in the non-regulated market. This will improve the level playing field for private investors;
- Reducing fiscal incentives for homeowners. This may lead to an increase in demand for rental housing;
- Creating more opportunities for housing associations to sell housing stock to private investors.
These measures are expected to lead to an increase in demand for rental housing, especially in the non-regulated sector.