Rent rise in the Dutch unregulated sector leveling off slightly

Concern about adverse effects of government intervention

Pararius quarterly rental report Q2 2022

In the second quarter of 2022, the average rent for unregulated sector rental properties in the Netherlands rose by 1.3 percent compared with a year ago. This is evident from figures from property portal Pararius. The rental market shows a very different picture than the owner-occupied market, where prices rose by 10.6 percent in the second quarter of 2022.

Pararius distinguishes between three delivery forms for rental properties: bare, upholstered and furnished. The rental price per square metre for upholstered properties (€ 16.11) did not change in the past quarter compared with the same quarter in the previous year. Furnished rental properties rose on average by 6.6 percent in the first quarter of 2022, with new tenants paying € 19.89 per square metre per month. This delivery form is the most expensive per square metre. New tenants paid 9.2 percent more for bare rental properties compared with the first quarter of 2021. The square metre price for this type of property was € 15.02 per month.

National developments

In the second quarter of 2022, the national square metre price of rental properties in the unregulated sector again exceeded € 17.00: new tenants in the Netherlands paid an average of € 17.04 per square metre per month. In the first quarter of 2022, new tenants paid € 17.18.⁴ The percentage increase was much greater than it had been the previous year, namely 6.7 percent. Despite the fact that rents rose again in the past quarter, the rent increase is leveling off.

Jasper de Groot, CEO of Pararius: “In periods of economic growth, a price increase of around five percent is completely normal. The percentage price increase for this quarter - 1.3 percent - is actually not that bad given the current inflation." Prices on the Dutch owner-occupied market have been rising much faster since 2017, according to figures from the Nederlandse Coöperatieve Vereniging van Makelaars en Taxateurs (NVM) (Dutch Cooperative Association of Brokers and Valuers). 

In the past quarter, an average home in the Netherlands sold for 10.6 percent more than a year ago.⁵ De Groot: “In the first quarter of 2022 this increase was 13.7 percent and in the fourth quarter of 2021 the selling price of homes even rose by 20.7 percent. In my opinion, those are worrying figures, which were caused by high borrowing capacity at a low mortgage interest rate.”

Provinces

At provincial level, rent developments in the second quarter of 2022 varied.  Compared with last year, the average square metre price decreased in the provinces Drenthe (-6.4%), Friesland (-5.7%), Groningen (-1.3%), Limburg (-2.6%) and Utrecht (-1.1%). With a square metre price of € 11.85 and € 10.95 respectively, the northern provinces of Drenthe and Friesland are the cheapest provinces in the Netherlands. In Groningen, new tenants paid € 15.65 per square metre per month.

Price increases were measured in Flevoland (2.8%), Gelderland (1.8%), North Brabant (3.5%), North Holland (5.4%), Overijssel (1.2%), Zeeland ( 5.4%) and South Holland (4.8%). Noord-Holland is the only province with a square metre price above twenty euros. In the second quarter of 2022, new tenants there paid an average of € 21.79 per square metre per month for a rental property in the unregulated sector.

Five largest cities

In the five largest cities in the Netherlands - Amsterdam, The Hague, Eindhoven, Rotterdam and Utrecht - the average rent for unregulated sector properties rose in percentage terms more than the national average. In Eindhoven, the "cheapest" large city, new tenants paid 11.1 percent more than a year ago (€ 17.25) and in Amsterdam rents for unregulated sector properties rose by 10.5 percent. New tenants in the capital paid an average of € 24.67 per square metre per month.

In The Hague (€ 17.30) and Rotterdam (€ 17.37), the square metre price is close to the national average. The rental price of unregulated sector properties rose in these cities by 3.4 and 7.4 percent respectively. In Utrecht, the square metre price is above twenty euros: new tenants paid an average of € 20.06 for a rental property, 3.4 percent more than last year.

City level

Amsterdam

For the first time, the average rent for unregulated sector rental properties in Amsterdam exceeded twenty euros in all districts. The Zuidoost district previously lagged behind, but in the second quarter of 2022 rents rose by 17.6 percent and new tenants paid € 20.84 per square metre per month.

The centre of Amsterdam is the most expensive part of the city to rent a home. New tenants paid € 27.18 per square metre per month in the second quarter (+12.8%). In Amsterdam Noord, rents rose by 19.2 percent to an average square metre price of € 21.90 per month.

Rotterdam

Rents also rose in Rotterdam. New tenants in the centre of the port city paid 6.8 percent more than a year ago; € 19.11 per square metre per month. In the popular Noord (€ 17.36) and Kralingen-Crooswijk (€ 19.11) districts, rents for unregulated sector properties also rose: new tenants respectively paid 3.3 and 8.5 percent more than they did in the second quarter of 2021. In Prins Alexander the average rent increased by 11.7 percent to a square metre price of € 14.72. This makes Prins Alexander the cheapest Rotterdam neighbourhood to rent a home in the unregulated sector.

Utrecht

In the city of Utrecht, a percentage drop in prices was measured in two district areas. In Northeast (€ 19.43), new tenants paid 2 percent less for an unregulated sector rental property and in South (€ 19.09) this was 1.9 percent less. In the centre of Utrecht (Inner City), the square metre price of a rental property rose by 6.2 percent; new tenants paid € 22.27 per square metre per month. The city centre is therefore the most expensive district of the cathedral city. The cheapest rent in Utrecht is in Overvecht: in the second quarter of 2022 a rental property in the unregulated sector here cost an average of € 16.50 per square metre per month (+5.9%).

Home types in the Netherlands

Pararius distinguishes three types of housing: apartments, single-family homes and detached houses. Apartments and single-family homes rose in price in the second quarter of 2022 by 2.6 and 3.3 percent respectively. New tenants paid € 18.00 per square metre per month for an apartment and € 13.81 per square metre per month for a single-family home. The price of detached rental houses rose by 2.6 percent in the second quarter of 2022 to an average square metre price of € 15.67.

Area segments in the Netherlands

Percentage price increases were measured in all area segments in the second quarter of 2022. The lowest percentage price increase was seen for properties smaller than 75 square metres. New tenants paid an average of 2.9 percent more than a year ago (€ 20.45). Renting a property is the most expensive per square metre in this area segment. Slightly larger properties, with an area between 75-100 square metres, rose in price by 4.2 percent. New tenants in this area segment paid an average of € 16.20 per square metre per month. With a square metre price of € 14.39, properties  with a living space between 100 and 125 square metres are four percent more expensive than a year ago.

Government intervention widens gap between social and unregulated rental sector

In May, the Dutch Minister for Volkshuisvesting en Ruimtelijke Ordening (Social Housing and Urban/Rural Planning) Hugo de Jonge announced his intention to intervene in the unregulated rental market and to regulate the mid-rental segment.⁶  

Rental properties between €1,000 and €1,250 must be regulated, according to the new program Betaalbaar Wonen (Affordable Living) in order to increase the rental offer and to combat extortionate prices. 

According to De Groot, regulation of the middle segment does not lead to more rental supply in the private sector, but less. “It is not profitable for investors to invest in a regulated rental segment. Instead of going along with the government's plans, we are already hearing from the market that investors are getting ready to sell their rental properties instead of letting them again. We also regularly receive feedback from agents and we see this reflected on our portal. In the second quarter of 2022, considerably fewer properties were registered and deregistered than in the preceding quarters. The rental supply in the unregulated sector in the Netherlands is declining.”

Regulating the unregulated rental market and increasing the social rental sector in the Netherlands are symptom-fighting measures that will backfire. The Housing Survey of the Netherlands (WoON) 2021, which is being drawn up and published by the Ministry of Binnenlandse Zaken (Interior Affairs), shows that the share of the unregulated sector rental housing accounts for only 8 percent of the total housing stock.⁷ De Groot: “And the percentage that matters- the expensive rental segment of the private investor with rents higher than € 1,000 per month - accounts for less than three percent of the total housing stock. It is incomprehensible and illogical that there is so much political attention for this marginal part of the housing market.”

More than 32 percent of the housing stock is social housing, according to the report. “The Netherlands is the absolute frontrunner in Europe when it comes to social housing,” says De Groot. "The government's plans to increase this offer make no sense."

De Groot fears that the government's plans to regulate more than 90 percent of the rental market in the Netherlands will soon cause significant problems rather than solve the shortage on the property market. There are examples in Berlin⁸ and Sweden⁹  where this has been tried before and failed. “Soon there will only be two flavors left in the Netherlands. Either one owns a home or one rents in the social rental sector. The unregulated rental sector is becoming increasingly scarce, which will lead to sky-high rents. The creation of a new rift between social and unregulated sector is in the making.”

Explanation calculations

The figures in this rental raport are based on 25,774 homes that were removed in the second quarter of 2022 after being offered for rent online. The condition in which a home is rented out (shell, semi-furnished or furnished) and the type of rental home (apartment, single-family home, detached house) have a major influence on the average rent per square metre.

All figures shown relate to rental properties that were offered in the Netherlands and that were removed in the relevant quarter, thus becoming available to new tenants. Only places where more than 30 measurements could be taken over the entire quarter were included in the calculations. Not included in the calculations were properties with a living area of less than 40 square metres or more than 300 square metres, or with a rent below €763.47 (liberalisation threshold from 1 January 2022 at 146 points). Rental properties offered with 'price on request' were also not taken into account in the calculations. In the calculation, no distinction was made between houses, apartments, detached houses, studios or rooms, unless stated otherwise.

Average rent per square metre per month

The rent per square metre per month is equal to the monthly rent divided by the living area (in m2) of the relevant home.

The average rent per square metre is based on a harmonic mean of the rent per square metre of all homes over which the average is calculated.

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

About Pararius

Pararius is the largest independent website for rental properties in the Netherlands. Pararius brings together tenants and landlords. Over 4,500 professional organisations advertise their available rental properties on Pararius. These organisations consist of real estate brokers, property management companies, developers and housing associations throughout the Netherlands. The website welcomes more than 2.5 million visitors every month. Visitors have free and unlimited access to the supply of over 70,000 properties. Pararius is multilingual and is also the largest expat rental platform in the Netherlands for the more than 350,000 expats working in the Netherlands.

This rental report is powered by Realstats.