In the Netherlands, the tenant enjoys substantial protection under Dutch rental law. This has resulted in the situation that tenants with increasing incomes keep living in cheap housing and don’t want to move. In order to get the housing market in motion and to encourage tenants to move more quickly to other residences and to better adequate supply of rental housing in both the social and free rental sector, a new law will become effective as from 1 July, 2016.
The tenant and landlord have the opportunity to conclude a temporary lease. The lease need not be terminated in the future, but ends by law. As a result the landlord does not need to have a (limitative) ground for termination. The purpose of this amendment is to make a part of the housing market available to tenants that otherwise have difficulty to obtain adequate housing. This makes it easier for the private landlord to lease his or her house, without being required to have a license to do so, e.g. a ‘leegstandsvergunnning’. Tenancy law now only has rules that facilitate elderly, disabled people and students. The new law will extend this to contracts for PhD students, large families and young people.
A temporary lease may last up to two years for houses that aren’t shared and up to five years for shared residences. These contracts end after the agreed period. However, there are some snags. Although the landlord does not have to terminate the lease, he must send a notice to the tenant. This notification shall not be made earlier than three months and no later than one month prior to the end date. If this is not done, a lease for indefinite shall be deemed to exisit time and the tenant will have full protection after all.
Another important issue is that these temporary contracts may be concluded only once, the second contract is legally a permanent contract. This means that the second one-year contract, is automatically a contract of indefinite duration, even though both contracts together not take more than two years. In addition, it is explicitly stated in the law that landlords of social housing, with certain exceptions, may not offer contracts of up to two years for houses that are not shared.
Maximizing the rent increases, even for private landlords
The 'rent' approach maximizes the sum of all rent increases landlords (including the available houses) inflation plus 1%. At the individual level, annual rent increases to a maximum of inflation plus 2.5% is possible. Remember, as a private owner of regulated rental properties, you are bound by the maximum rent increase, but not by a ceiling of a maximum rent increase.
The government continues to incentify tenants with higher incomes to move. For incomes above the allocation limit for social housing rent increase may amount to inflation plus 4 percent. The income is tested annually as it is under current law. Income-related rent increases no longer apply to pensioners with high incomes and households with at least 4 people. Also counting homes with an income-related rent increase is not included in the calculation of the rent increase if the additional revenue is used for investment. Those specific changes take effect next year. This year (2016) a maximum increase of inflation plus 1.5 percent for the lowest income group applies. For higher incomes a maximum increase of inflation plus 2 percent or inflation plus 4 percent applies. The current maximum rent increase is restricted to housing associations on inflation plus 0.4 percent. For tenants, the rent increase will turn out lower on average.
At the closing of future lease agreements, it is therefore important to clearly define the agreements, but also to schedule well the benchmarks to avoid being faced with a lease for an indefinite period.