Analysis Matthijs Korevaar exposes pain points in rental market

The analysis by Korevaar and Van Dijk shows that the current rental price regulations, such as the housing valuation system (WWS), in combination with the WOZ cap and energy label discounts, lead to large differences between market rent and permitted rental prices. This particularly affects smaller, older homes with a low energy label and a high WOZ value in the Randstad. As a result, landlords are increasingly opting to sell their homes instead of reletting them – a move known as "pounding out". According to the researchers, it is financially impossible for many sitting tenants to buy their homes, which leads to affordable rental homes in scarce locations disappearing from the supply. 

Minister's announced measures lead to disagreement within coalition

Minister of Housing and Spatial Planning, Mona Keijzer, has announced several measures in response to the findings, including an adjusted valuation of the WOZ value and the elimination of negative points for homes without outdoor space. The structural evaluation of the Affordable Rent Act (Wbh) will follow in 2027, but additional data will be collected in the meantime to closely monitor trends.

Nevertheless, there are major concerns within the coalition about the impact of the spring memorandum on housing construction and rental policy. Although the memorandum provides for a freeze on social rents, housing associations fear that this will limit their financial scope, which will jeopardise the construction of approximately 170,000 new homes. Deputy Prime Minister Eddy van Hijum (NSC) expressed his concern about this development. Minister Mona Keijzer acknowledges the problem and emphasises that the rent freeze is beneficial for current tenants, but detrimental to home seekers. In addition, there is disagreement within the coalition about the relaxation of the Affordable Rent Act, which would give private landlords more room to charge higher rents. This issue is leading to tensions, particularly within NSC and PVV, who were previously against such relaxations. The coalition parties will consult again to find a solution.

Major differences between WWS-determined rent and actual market rent

The study by Korevaar and Van Dijk shows that there are major differences between the rent determined by the WWS and the actual market rent. The WWS explains only 35% of the variation in rent prices, while a model based on market characteristics explains 72%. This suggests that tenants and landlords estimate the value of housing characteristics differently than the WWS does.

In addition, the study shows that homes in large cities, where demand for rental properties is high, often have a market rent that is well above the WWS threshold. As a result, the regulation can lead to the withdrawal of rental properties from the market, because landlords choose to sell their properties instead of renting them out. This effect is particularly visible in cities such as Amsterdam, Utrecht and Rotterdam, where the impact of the Affordable Rent Act is greatest.

Researchers advocate revision of current policy

The researchers conclude that this regulation in some cases leads to major rent reductions, which may result in a decrease in investments in rental properties. This may result in a shift from rental properties to the owner-occupied sector, without it being clear whether this redistribution is desirable. There is also a risk that fewer new rental properties will be built, which could further increase the shortage on the housing market in the long term.

The report emphasises that the WWS is better suited to the social rental sector than to the private rental market. The researchers therefore advocate a revision of current policy, taking better account of the actual market value of properties and the effects on investments in the rental sector. They advise policymakers to consider alternative forms of regulation, such as targeted subsidies or more flexible rent determination based on local market conditions.