Increasing amount of Dutch rental properties are being put up for sale

Rental offerings are decreasing, prices are rising

Pararius Quarterly Rental Report Q3 2023

Of all the homes listed for sale in the Netherlands in the third quarter of 2023, 7 percent originated from the unregulated rental sector. This percentage has seen a significant increase over the past year, going from 4 to 7 percent, as reported by the housing platform Pararius. The number of available unregulated rental homes for new tenants has decreased by 31.7 percent in a year, while the number of responses to these available rental homes continues to rise. The average square metre price of a rental home in the Dutch unregulated sector increased by 5.2 percent in the third quarter of 2023 compared to a year ago. In four of the five largest cities in the Netherlands, the square metre price increased much more than the national average.

Shift to sales market is increasing

In the third quarter of 2023, 7 percent of the homes for sale originated from the rental market. Shifts from rental to ownership properties were measured by examining homes listed for sale between Q4 2019 and Q3 2023. If a property was previously known in our database as a rental property and was subsequently listed for sale on Pararius, it is counted as a shift. Jasper de Groot, CEO of Pararius, said: "For a long time, around 3 to 4 percent of the homes listed for sale came from the unregulated rental sector, but since the fourth quarter of 2022, this percentage has been increasing significantly. We have been hearing from the market for some time that more and more private  investors are deciding not to re-rent their vacant rental properties but to sell them. Our research now shows that this is indeed the case. The supply of rental properties in the unregulated housing sector is shrinking further, partly because renting is becoming less attractive due to the accumulation of government measures for landlords. The rental properties are being sold to private owner-occupiers, further reducing the already limited supply in the unregulated housing sector.”

In the second quarter, the five largest cities in the Netherlands - Amsterdam, The Hague, Eindhoven, Rotterdam, and Utrecht - were responsible for 41 percent of the total rental listings offered on Pararius. In the third quarter of 2022, 43 percent of the total rental listings still came from the G5 cities, while in 2021, this figure was 53 percent. Pararius has observed a decrease in the number of homes being listed in the major cities since the introduction of the WOZ cap¹, a government measure that came into effect in May 2022. This has had direct implications for rental prices in these cities: the average square metre price increased in all five cities compared to a year ago.

It is clearly visible that outside of these five cities, the rental supply also continues to decrease. In absolute numbers, the available rental listings in the Netherlands have further decreased. Compared to a year earlier, the number of available rental homes in the unregulated sector for new tenants has dropped by 31.7 percent.

Increasing number of responses to rental properties

In the third quarter of 2023, a rental property received an average of 26 responses from prospective tenants, including email and phone inquiries. This is 13 percent less than in the third quarter of 2022 but twice as many as in 2021. De Groot: “Combined visitor data from Pararius and our sister company Huurwoningen.nl shows that the average number of responses to individual rental properties has significantly increased in recent years. Particularly in the major cities, the pressure on available unregulated sector rental properties is rising. In combination with the decreasing rental supply and rising rental prices, this is a concerning trend.”

In Amsterdam (€27.32), new tenants paid 8.2 percent more for a vacant rental property in the unregulated sector, while in The Hague (€19.14), the average square metre price increased by 7.2 percent. In Rotterdam (€19.14), new tenants paid 9.3 percent more than a year ago. In Utrecht (€20.35), rental prices remained relatively stable compared to last year, with tenants paying 0.6 percent more. In Eindhoven (€18.36), the square metre price increased by just over five percent compared to a year ago, with new tenants paying 5.4 percent more.

The square metre price in the five largest Dutch cities is above the national average, which in the third quarter of 2023 stood at €17.77 per square metre per month. This is 5.2 percent higher than a year ago.

Delivery forms in the Netherlands

Pararius distinguishes three delivery forms: shell², upholstered³ and furnished⁴. 

The average rent for unfurnished rental properties in the unregulated sector increased by 8.5 percent in the third quarter of 2023. New tenants paid an average of €16.03 per square metre per month. The square metre price for furnished and semi-furnished properties also increased; new tenants paid 7.3 percent more than a year ago for a furnished property (€21.50) and 5.2 percent more for a semi-furnished property (€16.81).

Housing types in the Netherlands

In the third quarter of 2023, new tenants paid 5.2 percent more for an apartment than in the third quarter of 2022. An apartment in the unregulated rental sector cost an average of €18.89 per square metre per month. A single-family home (€14.20) cost 3.1 percent more in the third quarter of 2023 than a year ago.

Size segments in the Netherlands

The average rent for an unregulated sector rental property in the Netherlands, the smallest size category (less than 75 square metres) saw the sharpest increase in the third quarter of 2023. Rental properties in this category averaged €21.88 per square metre per month, which is 6.7 percent more than a year ago. Larger rental properties had a square metre price below twenty euros. For instance, new tenants in the Netherlands paid €17.22 for a rental property between 75 and 100 square metres (+5%) and €15.04 for a rental property between 100 and 125 square metres (+5%). The average rent for a rental property between 150 and 175 square metres increased by 2.1 percent, with new tenants paying €14.72 per square metre per month.

Shift of rental properties to housing market is a critical development

Shortly after the release of the Pararius Rent Report in July 2023,⁵ the current Dutch government fell, and Prime Minister of the Netherlands Mark Rutte announced his resignation. In September, it became clear that all housing market plans of the outgoing Dutch Minister for Housing, Hugo de Jonge, can proceed. The main legislative proposals of Minister De Jonge, which include the regulation of mid-range rental properties (Affordable Rent Act) and housing agreements (Housing Regulation Act), have not been individually reviewed yet. This is because these legislative proposals have not been submitted to the House of Representatives. Although the committee had the option to designate these laws as controversial beforehand, it did not do so. As a result, these legislative proposals remain on the agenda without controversial status for the time being.⁶

According to De Groot, this decision provides room to consider that a future government reviewing these plans might come up with a different approach. "It would be much better to work with a long-term vision for the housing market and move away from short-term solutions. The accumulation of past measures only addresses the symptoms for show, while the real problem, the balance in the housing stock, continues to grow." De Groot is particularly referring to the Affordable Rent Act, which regulates mid-range rental properties and places them under the rental value system, the so called ‘woningwaarderingsstelsel’. The rental value system currently applies to properties up to 136 points. With the expansion of the point system, rent price protection will apply to properties up to 186 points, which currently corresponds to a rent of €1,021.02.

Currently, only 8 percent of the Dutch housing stock consists of rental properties in the unregulated sector, while the social sector accounts for 32 percent. The remaining 60 percent is owner-occupied. De Groot: "This is far too little to serve as an outlet for people who cannot afford or do not wish to rent in the social sector. The demand is much greater than the supply."

De Groot advocates for increasing the housing stock in the unregulated housing sector, but there is no sign of that happening so far. In fact, Pararius observes a decreasing number of rental properties being listed as available on its platform every quarter. In the third quarter of 2023, 31.7 percent fewer properties were listed for rent compared to a year ago.

De Groot states: “Our figures also indicate that an increasing portion of rental properties, when vacated, are not being re-rented but are transitioning to the housing market for sale. Private investors are selling these rental properties because the one-sided accumulation of measures for landlords has made renting no longer profitable. As a result, the number of available rental properties in the unregulated  sector is drastically decreasing, while the demand for these properties remains consistently high. Restoring the balance between social housing and the unregulated rental sector will kickstart the turnover, bringing supply and demand more in line with each other. This will provide tenants with more choices, encouraging landlords to continue investing.”

According to the housing forecast by ABF Research, the current housing shortage has increased from 315,000 homes in 2022 to 390,000 in 2023. This means that there are 826,800 housing seekers without available homes.⁷ De Groot adds: “The population is growing, but the housing stock is not keeping up and is completely out of balance, resulting in poor turnover. For years, there has been a chronic undersupply of new construction, and the government measures already in place, as well as the Affordable Rent Act still pending, only serve to maintain the status quo because they discourage investors from investing in new construction and renovating existing properties.” 

About Pararius

Pararius is the largest independent housing platform in the Netherlands. Only professional brokers including NVM, VBO, VastgoedPRO, housing corporations, administrators, investors, and developers can present their available housing supply on the platform. This offer is registered by more than 4,500 rental and sales specialists on Pararius, ensuring high quality and up-to-dateness. The website welcomes over 2.5 million visitors each month. These visitors have free and unlimited access to an offer of over 60,000 properties. Pararius is available in six languages and, for the more than 350,000 international knowledge workers employed in the Netherlands, it is also the largest expat rental platform in the country.

Explanation of calculations
The figures in this rental report are based on 20.213 properties that were signed off in the second quarter of 2023 after being offered for rent online. The condition in which a property is rented (bare, semi-furnished, or furnished) and the type of rental property (apartment, single-family home) greatly affect the average rental price per square metre.

Looking at the distribution of rental supply in the Netherlands, 23% of the total rental stock in the unregulated sector is rented out by institutional investors. These are primarily rental properties that are offered bare (without upholstery and furniture). The remaining 77% of the housing supply is rented out by private investors. These are rental properties that are mainly semi-furnished and/or furnished. The Pararius rental report is compiled based on approximately 105,000 rental transactions in the unregulated housing sector annually. About 15% of the rental transactions in the rental report are bare rental properties, and 85% are semi-furnished and/or furnished rental properties, which corresponds to the distribution in the Netherlands. The composition and the Dutch coverage of these rental transactions give a representative picture of the breakdown in the total Dutch unregulated rental sector. As such, the rental report provides a reliable image of the rent price development in the Netherlands.

All the figures shown relate to rental properties that were offered in the Netherlands and were signed off in the relevant quarter, thereby becoming available for new tenants. Only locations where more than 30 measurements could be taken throughout the quarter were included in the calculations. Rental properties with a living area smaller than 40 square metres and larger than 300 square metres or with a rent price below € 808.06 (liberalized limit from July 1, 2023 at 136 points) were not included in the calculations. Also, rental properties for which the price was given as 'price on request' were not included in the calculations. The calculation did not distinguish between homes, apartments, detached homes, studios, or rooms, unless otherwise specified.

Explanation of transition of rental properties to the property owned market calculation

To detect the shift of a property from the rental to the sales market, all properties that were listed for sale during the measured period (Q4 2019 - Q3 2023) were examined. For each property for sale, it was determined whether there was a prior listing for the same property as a rental property in the dataset. If the second-to-last listing for a property was a rental listing, it was marked as a shift in the analysis. The total shift was then calculated as the percentage of all properties for sale that came from the rental market.

The analysis considered only the last listing prior to the sale listing. Additionally, only rental listings that were published at least 30 days before the sale listing were considered to exclude properties that were simultaneously offered as both rental and for sale. The dataset consists of all properties for sale listed on Pararius during the specified period. This dataset represents 33% of the total sales market and provides a representative overview of trends in the entire sales market.

Explanation of average number of responses per property calculation
The average number of responses is calculated by dividing the total number of sent responses per period (month/quarter) by the total number of properties for which a response was sent in the respective period. Because the calculation looks at the moment when the responses were sent, responses from the same property (but sent at different times) can be counted in multiple periods. The calculation indicates how many responses have come in for a property within a time period (month/quarter) via digital request forms on Pararius. Responses by phone are also included. The total number of responses that come in for a property can be larger when looking at a longer period.

Average rental price per square metres per month

The rental price per square metre per month is equal to the monthly rental price, divided by the living area (in m2) of the respective property.

For the average rental price per square metre, a harmonic average of the rental price per square metre of all properties over which it is calculated is used.

To mitigate the impact of outliers on the average, the calculation of averages is done over the values that fall between the 2nd and 98th percentile (inclusive, calculated over the full dataset).

In the above example, it is noted that the surface area of all rental properties falls between 40 and 300 square metres. None of the properties are listed with a price upon request. There is one property where the rent per square metre is higher than the 98th percentile (€37.50) for this quarter: rental property 10. This rental property is not included in the calculation of the average, while the other 9 properties are.