The perfect storm of regulation and economy on the Dutch residential rental market

Abstract

The Dutch housing market is characterised by a housing shortage, mainly in the affordable segment. For this reason, the government has proposed and/or implemented several policy changes to alleviate this stress on the market. However, the Dutch economy is also in a downturn. This research explores how Dutch institutional investors in the rental housing market deal with changing policies in economically challenging times. The scope encompasses inflation and interest rate increases, as well as the Affordable Rent Act (WBH) and transfer tax (RETT). Previous research shows that rent control can have both positive and negative effects, and that increasing RETT affects property value and transaction volume. For this reason, it is worth investigating what the combination of these policy changes and an economic downturn does to the investment behaviour of institutional investors, to get an understanding of the effectiveness of the proposed policy changes. Through literature review and interviews with stakeholders, we find that there seems to be a 'perfect storm' hanging over the residential rental market that negatively affects the investment behaviour of institutional investors in the Netherlands. This would mean that implementing the proposed policy changes in the current context would be counterproductive, as it is, partially, up to institutional investors to fill the demand for affordable housing.