According to the research report ‘Spotlight Residential – The Netherlands – Q4 2021’, there is both a quantative and qualitative shortage of homes in the Dutch private rental market - especially in the major cities. This is particularly remarkable as investors are very interested in investing in the sector.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “For the Dutch rental sector, the amount of social rented dwellings still ensures households with lower incomes have access to housing, even in cities where demand has risen strongly. However, households ineligible for social housing due to having an income which exceeds the limit for social housing are finding it increasingly difficult to find affordable private rental housing. This is especially the case for larger Dutch cities where the housing shortage is more severe.”
Bas Wilberts, Head of Residential & Hotel Investment at Savills in the Netherlands, says: “To improve the affordability of homes in general, increasing the number of new-builds to 100,000 instead of 75,000 homes per year until 2030 is a necessity, not a luxury, which will require a great deal of effort from housing corporations, investors/developers, and the Government. Large-scale additions in the €750 to €1200 per month price category are especially necessary, to improve affordability of private sector rental homes in the Netherlands but also to help relieve pressure on the owner-occupied housing sector as there will be more alternatives to choose from.”
Although housing associations strive to add more, up to now new-builds for this segment are almost exclusively provided by investors/developers. In Utrecht and The Hague for example, the majority of all building permits issued in the last five years were for developers/investors building rental homes. In total, developers/investors in these two cities received 9,390 and 5,742 building permits respectively. These numbers are higher than in the City of Amsterdam, where only 31% of all building permits were issued to developers/investors with a focus on rental homes.
Ronald Koemans, Associate Director Residential & Hotel Investment at Savills in the Netherlands, says: “In view of the significant shortage of private sector rental homes, particularly in the medium-priced range, it is very concerning for the City of Amsterdam that the available capital of developers/investors is not fully utilised. After all the City of Amsterdam aims to build approximately 1,670 new rental homes in the medium-priced sector annually until 2025, but in 2020, at 1,236, not enough building permits were issued for rental dwellings. As a result, the shortage will likely increase further, especially if housing associations are not able to add sufficient dwellings in this segment.”
Investors and developers are already responsible for a large share of new build medium-priced rental homes, however, there is room for improvement. Better use of this potential will reduce the qualitative shortage and improve affordability, but politics around rent regulations are keeping the market from unlocking its full potential. In 2021, considerable regulations were introduced for the housing market. These policies are mainly focused on improving affordability, but the downside is that the financial feasibility of new-build projects is reduced. The result is that the available capital of developers/investors is not fully utilised. Cooperation between the different parties is therefore necessary to significantly improve affordability in the private rental sector, according to Savills.
Read the full report here.