Highest rent increase in 6 years, especially in Rotterdam and The Hague

As of 1 July this year, tenants paid an average of 2.9 percent more rent than a year earlier, according to figures from Statistics Netherlands (CBS). That is the largest increase since 2014. The largest rent increases this year were in Rotterdam and The Hague, where rents rose by 4.1 and 3.6 percent respectively. In Amsterdam, prices rose by an average of 3.5 percent.

The higher increase is mainly due to higher inflation, according to Statistics Netherlands (CBS). The maximum permitted rent increase is linked to inflation: if inflation rises, rents are allowed to rise faster. In 2020, this maximum rent increase was 5.1 or 6.6 percent, depending on the tenant’s income.

This year’s inflation rate was 2.6 percent. That means that the real rent increase – the average rent increase minus inflation – was 0.3 percent this year. Since 2009 the real rent increase has not been so low.

A majority of the Senate wanted the usual rent increase on 1 July not to go ahead because of the corona crisis, but twice Minister Ollongren of the Interior ignored a motion on this matter. According to her, a rent freeze was not necessary and landlords had to help their tenants if they had financial problems. The Upper House then supported a motion of censure against the Minister, which is very rare.

Social housing

70 percent of all rental properties are owned by housing corporations. They mainly own rental houses, but also houses in the private sector. Rents of their social housing units rose by an average 2.7 percent this year. A small part of the corporations has postponed the rent increase to later this year. That is about 100,000 homes out of a total of 2.3 million.

Aedes, the sector association of housing associations, said in mid-August that half a percent of the tenants of 150 housing associations surveyed had made use of a payment arrangement. According to the housing association, the financial situation of many tenants had quickly improved after the lockdown, for example thanks to income support from the government. In addition, tenants in the social sector can claim rent allowance if they earn less than a certain amount.

Free sector

In the free sector the average rent rose by 3.0 percent this year. This is lower than in 2019. At that time, rents in the private sector rose by an average of 3.3 percent. According to Laurens van de Noort, managing director of Vastgoed Belang, his members hardly saw any rent arrears increase. Approximately 40 percent of the homes owned by members of Vastgoed Belang are in the private sector. Van de Noort believes that the government support measures have meant that no large rent arrears have arisen.

Rents rise especially when a new occupant arrives in a rental property. When new tenants take up residence, the rent rose on average by 9.5 percent compared to the tenant before. Last year it was 8.2 percent. Landlords are not bound to a maximum rent increase if a new tenant moves into a house.

“Because of the tight housing market, you can see that the rents of neighbors in one complex can differ enormously,” says Peter Hein van Mulligen, chief economist of Statistics Netherlands. “Some people have been renting at low rates for twenty years. When they leave, the rent for the new tenants immediately becomes a lot higher.”

Every two years firmly up

Since 2016, landlords are allowed to conclude temporary contracts of up to two years. The Woonbond is not happy with this. “This was intended to make it easier to rent out houses and to increase the supply”, says a spokesperson. “But in fact it means flexibility for the landlord, who can now arrange new tenants for the property every two years and raise the rent at will. This is something we see happening a lot.”

Carla Huisman, a researcher at the University of Groningen, earlier warned against a silent shift from fixed leases to agreements of up to two years’ duration. According to her, the number of temporary leases is increasing, but nowhere does it show that more houses have been added: “Especially in the current tight market, you don’t need these kinds of contracts. You have to protect consumers. Now this happens a lot in big cities as a way to stretch rents considerably”