Municipal regulations mid-rental segment clash with national legislation

27% of Dutch municipalities have regulations for the mid-priced rental segment
From 2017, Dutch municipalities have been given the option to designate mid-priced rental housing as a separate category in zoning plans. In the area covered by the zoning plan, a certain percentage (at least) of newly built houses must then be in the mid-priced rental segment. In this way, municipalities can (under public law) steer the strengthening of the mid-priced rental segment in the housing stock. Capital Value’s survey shows that 27% of Dutch municipalities have introduced regulations with regard to the new construction of homes in the mid-priced rental segment. In addition, 17% of municipalities plan to introduce these regulations in the short term and 20% are currently investigating the possibilities.

Mismatch operating terms
Many municipal regulations include a time limit on how long housing in the mid-rental segment should be operated. 59% of municipalities use a period of 15 years after completion, 24% a period of 20 years and 7% a period of 25 years. The bill does not mention a period, but links it to the future deficit and a review after five years. This means that no clarity is given for what time period the national scheme will be in force.

Municipal rules potentially jeopardise new construction of rental homes
Capital Value’s research shows that local regulations in some municipalities are stricter than the national bill. In most other municipalities, the accumulation of national and local regulations leads to unfeasibility of projects. Combined with the current market situation (increased construction costs, rising interest rates), the result is that more and more projects are financially unfeasible. Stacked regulations create a lot of ambiguity among market players, housing associations and tenants. Capital Value advises municipalities to align with national regulations.

In an earlier study, Capital Value warned that the number of building permits will fall to possibly 50,000 by 2023, while the cabinet target is to reduce the housing shortage to 2% by 2035 or earlier and build 100,000 new homes annually in the coming period. It also revealed that the construction of possibly about 40,000 houses will be postponed for which permits have already been granted or the procedure is ongoing. Marijn Snijders, managing director Capital Value: “We advise municipalities to comply with the national regulations to avoid that building projects become financially unfeasible. We hope that national regulations can provide more clarity on this. We need to prevent more projects coming to a standstill as the housing shortage in the Netherlands continues to rise.” Consultation on the Affordable Rent Bill is open until 27 March For more information, please refer to the ministry’s website (in Dutch).