Rental Housing Sales Surge in The Netherlands

Get ready for a surge in rental housing sales in The Netherlands as real estate companies warn of a second wave hitting the market next year. Stay informed about the latest developments in the real estate market and how it may impact rental properties in The Netherlands.

The Netherlands is bracing for a second wave of rental properties being sold into the owner-occupied market next year, as warned by 12 large real estate companies in a letter regarding the 2025 Tax Plan. This trend follows the footsteps of many small investors who have already put their rentals up for sale due to recent cuts to tax breaks and plans to regulate mid-market rentals. According to a report by Telegraaf, next year will see large and medium-sized landlords following suit.

Most of these larger landlords have financed their properties with loans, allowing them to deduct up to 1 million euros in interest from their corporate tax per private company. However, the 2025 tax plan eliminates this 1 million euro threshold, limiting investors to deduct only up to 20 percent of their profits. This change puts larger investors at risk, leading to an increase in sales by private companies.

The impact of these changes is significant, with an investment of 400 million euros in homes, half of which is borrowed money, currently yielding an annual profit of 4.5 million euros. With the limitation of interest deduction, this profit is reduced to 2.7 million euros, making it insufficient to cover the yearly repayment of 4 million euros, prompting investors to consider selling their properties.

In addition to the tax changes, the Senate is expected to pass the Affordable Rent Act, which aims to regulate mid-market rentals. This legislation is likely to further slow down the flow in the Dutch housing market. The regulation of mid-range rents is seen as a form of subsidy that incentivizes tenants to stay in their current housing, leading to a shortage of available homes similar to what is seen in social housing.

The Netherlands is on the brink of facing housing challenges similar to those in Stockholm, where there is a surplus of regulated housing and a widening gap between renting and purchasing. The disparity between market prices for mortgages and subsidized rental rates exacerbates the divide between the rich and poor, as tenants struggle to build equity while remaining in subsidized housing for extended periods.

The impending changes in the housing market in the Netherlands highlight the need for a comprehensive approach to address the challenges faced by both investors and tenants. The impact of the 2025 Tax Plan and the Affordable Rent Act will reshape the landscape of the Dutch housing market, requiring stakeholders to adapt to the evolving regulations and market conditions.