Renting in the Netherlands has become increasingly difficult, with rental costs soaring and housing supply lagging behind demand. In response, the Dutch government introduced the Affordable Rental Act, aimed at capping excessive rental prices. However, the policy has sparked divided opinions among economists and housing experts.
According to data from the Netherlands’ national statistics office, average rents rose by 5.4% year-on-year in July 2024—the highest increase since 1993. For those unable to afford private rentals, social housing offers an alternative. Yet, the average wait time for social housing reached seven years in 2023, with even longer waits in high-demand urban areas. Research by ABF indicates a housing shortfall of approximately 401,000 dwellings this year.
The housing crisis stems primarily from supply shortages, compounded by what UN Special Rapporteur Balakrishnan Rajagopal described as “a series of poor policy choices.” After an 11-day visit to the Netherlands last year, Rajagopal condemned the nation’s housing policies for exacerbating the crisis.
The Affordable Rental Act, introduced in July 2024, seeks to address unaffordable rents through a points-based system. Properties are categorized as low, middle, or high value based on criteria like size, location, and outdoor space. While high-value rentals remain unregulated, price caps apply to the lower categories. Enforcement will begin in January 2025, allowing municipalities time to prepare fines for non-compliant landlords.
Proponents of the act, like Housing Minister Hugo de Jonge, argue it will support tenants while ensuring renting remains profitable for landlords. Critics, however, fear it may reduce profitability for landlords, potentially driving them to withdraw properties from the rental market and further straining supply.
Klaas Knot, president of the Dutch central bank, expressed skepticism, suggesting the act could worsen the housing crisis by discouraging landlords. “I don’t want to make a political judgment about a law that was ultimately adopted by parliament. But I do look at the consequences,” Knot said, urging the government to reconsider the legislation.
Not all experts agree with Knot’s assessment. Richard Ronald, professor of housing at the University of Amsterdam, argued that landlords selling properties would not diminish supply but instead shift homes to the owner-occupied market. He also highlighted that simply increasing the number of private rental properties has not effectively moderated prices.
“Since 2011, the stock of private rental housing in the Netherlands has actually increased significantly,” Ronald noted. “The problem is that this has been driven by the liberalised sector.”
As debates continue, the Affordable Rental Act underscores the complexity of solving the Netherlands’ housing crisis while balancing the interests of tenants, landlords, and policymakers.
