Investors are withdrawing from the Dutch housing market, buying far fewer homes than four years ago. That is good news for people looking to buy a home, but terrible news for a large group of tenants.
In 2019, 8.4 percent of all owner-occupied homes sold in the Netherlands were bought by investors. The image emerged that investors with deep pockets were snatching homes away from home seekers, and the government took measures against it. The government increased the transfer tax from 2 to 10.4 percent and let municipalities implement purchase protection on certain homes, obliging the buyer to live there.
According to the realtors’ association NVM, the increase in transfer tax did not do very much to deter investors, but the purchase protection implemented by many municipalities effectively sidelined them. First-time buyers benefited from this, with their share in the owner-occupied market increasing by 2 percent in cities that banned buy-to-let.
“There are winners and losers. The home buyer gains if the investor withdraws, but there is also a group that falls between the cracks, which is really worrying,” housing market professor Peter Boelhouwer told the Dutch newspaper. “These are people with an average income who have to wait too long for a social rental home but do not earn enough to buy. They depend on the free sector, but what will they do if those homes are no longer there?”
The Canadian investor Eres, who rents out 6,900 apartments and terraced houses in the Netherlands, announced that it wants to sell. That is expected to hit the free sector. Sophie Kraaijeveld of ING Real Estate also thinks that the prices of investment properties will fall.
According to Rabobank economist Nic Vrieselaar, the Dutch housing market lacks balance with falling purchase prices, rising interest rates, and sky-high land prices. “Building rental houses on that expensive building land is almost impossible. And anyone who now buys a house to rent it out will no longer be able to complete the picture.”
He, too, expects that investors’ withdrawal will cause home prices to fall further. “If there is more supply of owner-occupied homes, it will be beneficial for first-time buyers, but not for people who want to rent.”
Housing Minister Hugo de Jonge’s plans to also regulate part of the free rental market and changes to wealth and asset tax in box 3 also have private landlords looking to sell their homes. Owning a second home to rent out is simply no longer profitable, professor Boelhouwer said.
According to the NVM, the government’s measures only combat the symptoms of housing scarcity in the Netherlands. “It does not solve the underlying problem of the meager supply in the owner-occupied and rental market,” chairman Lana Gerssen said. “The solution lies in building more, not in regulating everything.” The more investors pull out, the fewer construction projects get funded, she pointed out.
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