The number of buy-to-let houses has long been increasing in The Netherlands. Economists Paul de Vries and Ruben van Leeuwen expect on the basis of new data that this development continues: the future prospects for this segment of the housing market are positive. Important drivers are the extremely attractive financial returns and the increasing demand for this type of rental housing. At present, about 5% of total housing stock in the Netherlands – 372,000 homes – and this stock of buy-to-let homes represents a total value of approximately 65 billion euros.
The size of the market
Comparison with Land Registry figures (Kadaster)
Growth by increased supply
For decades, the private rental sector, and thus the buy-to-let sector, had no chance of growth. The Dutch government stimulated the purchasing sector and supported the regulated rental sector. Recent reforms on the housing mortgage market and the new housing act ensure that the buy-to-let market gets more space while low yields in financial markets combined with low mortgage rates have triggered individuals to invest in the housing market.
There is also more offer of buy-to-let homes. The low interest environment, in particular the low interest rate on savings, makes investment in homes financially more attractive. In addition, during the crisis period the rent has simply gone through while the house price has fallen sharply. In other words, a profitable return on housing can be achieved. In addition, the revised housing law (July 2016) provides considerably more opportunities for temporary lease contracts of two to five years or temporary lease contracts that depend on, for example, the tenant’s age.
Our expectation is that the number and share of buy-to-let homes will increase in the coming years. We see a trend that private individuals with the ability dare to buy rental homes and then rent out. Furthermore, the growth of this market is a reason for mortgage providers to develop special buy-to-let mortgage products. In the Dutch cities of Amsterdam, Rotterdam and Utrecht and the Expat city of The Hague, the supply of buy-to-let houses is growing.
Source: MeJustice, article by Paul de Vries and Ruben van Leeuwen, (translated selection)
Published: January 3rd 2017