How does the new Rent Law work?

The Affordable Rent Act, which went into effect July 1, 2024, aims to make rental housing in the Netherlands more affordable, especially for people with middle incomes.
The law focuses on regulating rents in both the regulated rental sector (social renting) and middle renting, and contains a number of important provisions:

1. Expanding the regulated rental sector.

• Regulated middle rental: This law introduces a new category of regulated middle rental housing intended for middle-income tenants.
  These are rental properties with rents between the social rent limit (as of July 1, 2024: €879.66) and the middle rent limit (maximum €1,157.95 per month)
• WOZ value cap: There is a cap on the share of WOZ value in the point count of rental properties.
  This prevents homes with a high WOZ value from automatically entering the free sector.

2. Middle rent and income test

• Income limits: The law states that regulated middle rental housing may only be made available to middle-income earners.
  For 2024, this means:
  • Single-person households: with incomes between €47,699 and €62,191.
  • Multi-person households: with incomes between €52,671 and €82,921.
• Housing permit: Municipalities can set allocation rules for regulated middle rental housing so that it is specifically allocated to house seekers within set income limits.
  This is done through a housing permit.

3. Maximum rent increase

The law limits the annual rent increase in the free sector so that it is tied to a percentage based on inflation or collective bargaining wage trends.
The maximum increase in 2024 is set at 5.5% (4.5% inflation + 1%).

4. Restrictions on temporary leases

The law restricts the use of temporary leases, which may only be applied in specific cases.
This means that in most cases tenants will have more security with indefinite leases.

5. Monitoring and enforcement

The law provides for stricter inspections and enforcement by the Rent Commission and other agencies to ensure compliance with rules around rents and allocation.

The Affordable Rent Act is an important step in promoting affordable housing in the Netherlands, especially in major cities where the pressure on the rental market is greatest.
For landlords, the law means that they must adhere to stricter rules when setting rents and renting housing to certain income groups.

The law should ensure that more people can get affordable rental housing with a rent that matches the quality of the property.
The regulated rent will be extended to mid-rent housing up to and including 186 points according to the Housing Rating System (WWS).
The regulation of Middle Rent will apply to new leases and in some cases to existing leases.
There will be three segments in the rental market, the boundaries of which will be delineated each year as of Jan. 1.

• Low-end (up to the liberalization limit which is currently €879.66) at 148 points
• Middle segment (from the liberalization limit up to 186 points (currently €1,157.95)
• High segment (free sector: from 187 points > from (currently) 1,157.95 euros)

A dwelling that has more than 186 points and is let in the free sector cannot revert to the regulated middle rental segment during the term of the lease if the point value of that dwelling comes out at 186 or less as a result of a decrease in the WOZ value of that dwelling.
That rule does not apply if (the same) dwelling has a point value of 186 or less when a subsequent tenant starts renting (as a result of a decrease in the value under the WOZ).
Landlords will be required to submit a WWS point score for each new letting and to state in the rental agreement
(a) that the tenant can have the rent reviewed by the rent assessment committee, and
(b) the contact details of the municipality’s rent hotline.
A number of things will change in the calculation of the Housing Rating System (WWS):

• WWS is being objectified and simplified;
• For example, points are awarded to luxury items such as a Quooker in the kitchen or air conditioning (with heat function);
• Private Parking Space and/or Charging Station are rated higher;
• Outdoor spaces and common areas are rated higher;
• Higher energy labels (Bt/m A++++) are better rated with the law’s passage;
• Bad labels (E,F,G) actually receive deduction points;
• Different measures for national, municipal, provincial monuments.

By making the WWS mandatory, the bill strengthens the legal position of tenants in both the social and middle rental segments.
For example, the law provides for tenants to have greater access to the Rent Commission and all landlords are required to submit a point score of the rental property to the tenant when entering into a new lease.
Municipalities become responsible for supervision and enforcement of new leases.
There is an exception to this.
The tenant, who rents in free sector (initial rental price higher than the liberalization threshold), can obtain rent reduction (not with retroactive effect) in a procedure at the Rent Commission after 1 year after the new law comes into effect, if his house was in the regulated segment before the law came into effect.
Municipalities are given the option to stipulate in their housing ordinances that middle rental housing may only be rented to middle-income households.
No minimum income limit applies in this regard.
is the full Affordable Rent Bill can be found.

The Affordable Rent Act and the Fixed Rent Act have been in effect since July 1, 2024.
With the enactment of the Fixed Tenancy Contracts Act, new tenants will, in principle, receive an indefinite rental contract immediately.
Permanent leases become the norm, but there are exceptions to this rule.
This means that the possibility introduced on July 1, 2016, to enter into a maximum 24-month lease without tenants being able to invoke rent protection at the end will be reversed to a significant extent.
However, this does not mean that temporary leases can no longer be entered into at all.
As an exception to the main rule, certain target groups can be offered a fixed-term rental contract, this contract is then for a maximum term of 24 months.
These exceptions are as follows:

• Students who rent for study in a place other than their residence.
• Tenants living temporarily elsewhere due to urgent work or renovation.
• Persons coming out of social care or in a social emergency situation.
• Tenants entering into a second chance lease after a terminated first lease.
• Persons between the ages of 16 and 27 who take over a lease after the death of the parent/guardian.
• Parents who temporarily rent housing after separation to stay close to their minor children.
• Tenants who work in the Wadden Islands and do not live there.
• Permit holders coming directly from a COA shelter and waiting for permanent housing.

Temporary rentals in 2024

In addition, temporary rentals remain possible in the following situations:

• Temporarily and unnecessarily vacant homes may be temporarily rented through the Leegstandwet with the permission of the municipality.
• Intermediate rent is possible when people are temporarily absent, such as when they are traveling for a long time or going abroad for work.
• For tenants who belong to a certain target group, target group contracts are possible, for example for a student whose lease is terminated when the student stops studying.
• Hospita rental where the hospita and the tenant live in the same apartment and share common facilities.
• Leases for uses that by their nature are short-term, for example, the rental of a vacation home.

Termination of lease by landlord

If the landlord wants to terminate a permanent lease, he must do so with a legal ground for termination.
Under the Fixed Lease Law, a new ground for termination will be added as of July 1, 2024, and the existing ground for termination “urgent own use” will be expanded.
After the expiration of the lease term, the landlord may terminate the lease in order to sell the property.
However, this is subject to a number of conditions:

• This is only allowed if the landlord is a natural person, married or in a registered partnership, and does not rent more than 1 property.
• This should be in the lease agreement.
• The agreed term is a maximum of 2 years.
• The landlord must have lived in the property themselves for at least 2 years prior to the start of the lease.
• A landlord may terminate the lease once on this ground and must report it to the municipality.

Extension urgent own use

The landlord may terminate the lease after the agreed term to allow the rental property to be occupied by a relative by blood or marriage in the first degree, such as parents or children.
This must be stated in the rental agreement.
The law does not affect already current temporary leases, they simply continue until the end date.
When the contract is extended, it is converted into an indefinite contract.

The changes will apply to all new rental agreements established on or after July 1, 2024. Thus, for new rental agreements, you, as a landlord, must provide tenants with a point score showing how many points the property has and the maximum rent that can be charged according to the WWS.

This also applies to rental properties in the middle segment. As a landlord, you are obliged to adhere to the maximum rent. Failure to do so may result in enforcement action.

Affordable Rent Act for existing contracts

Three situations apply to existing leases:

• If the current rent is below the current liberalization limit, the Affordable Rent Act goes into effect immediately.
  This means that landlords must comply with the maximum rent according to the modified WWS effective immediately and they must adjust the rent immediately if necessary;
• If the rental property is rented in the free sector but this property has a point number belonging to the lowest segment after the law comes into force due to the adjusted WWS,to the new rules apply after one year.
  This means that landlords must adjust the rent according to the adjusted WWS as of July 1, 2025; and
• If the current lease does not fall under the aforementioned situations,then the new law will not bring any changes for this lease.

Impact on housing to housing sharers

The new legislation has the potential to have a huge impact on landlords who house sharers (more than 2 people who do not share a permanent common household).
This is where the housing valuation system for non-self-contained living spaces (WWSO) applies, which will often result in a lower maximum rent.