Netherlands caps rent on 9 out of 10 rentals

Netherlands extends rent cap to 90% of rentals on July 1

A landlord with a second flat faces a decision with two outcomes: rent it out with an indefinite contract and a capped price, or sell it. The most repeated answer — also on the other side of the Pyrenees — is the second. On July 1, new rules come into force in the Netherlands that extend rent control to approximately 90% of rental properties, with indefinite contracts and regulated rents. The reform arrives with two crossed labels: that of a pogre measure that claims to protect tenants and that of an intervention which, according to its critics, makes exactly what it claims to make cheaper more expensive.

What changes in Dutch rental law on July 1

The extension reaches nearly nine out of ten rented homes in the country. For those who rent, the contract becomes indefinite and the price capped; the landlord loses the ability to adjust the rent to the market and to recover the property at will, according to the assumptions being handled. The most repeated argument among critics of the measure is that it goes against supply and demand, however much it is sold as support for the less well-off, and some describe it as a step towards an economic control model in the style of Venezuela or Cuba. A rented home ceases to be a liquid asset and becomes an indefinite-term commitment.

The points system and the extras that would exempt from regulated prices

The rule does not set a single ceiling: it allocates points. The more amenities a home accumulates — geothermal heating, minibar, jacuzzi — the more points it adds to the scale and the easier it is to place it in the free regime, with an uncapped price. The small print has its irony: the more expensive the property is to equip, the less public limit it bears. The result imagined by the most sceptical is a race for amenities in small flats in peripheral neighbourhoods, with jacuzzi, geothermal heating and ping-pong table to escape control.

If there is no profitability, the flat leaves the market

The second argument dominates any conversation about price caps: no one buys a property to rent it out with limited rent and with a tenant who, in practice, cannot be moved. The most repeated reasoning is that if the landlord is penalised, landlords stop appearing, and the available stock contracts instead of growing. Hence the recurring prediction: the measure will achieve the opposite of what it seeks, withdrawing supply and pushing prices up. It is a thesis that does not depend on the ideology of whoever signs it, but on how long the market takes to react.

The Spanish precedent: old rent and shielded deposits

Spain does not need to look far to see something similar. Here there existed renta antigua, a regime of extended contracts with frozen prices, and today a landlord who wants to recover their flat must justify the reason: own need or that of a first-degree relative, non-payment or coexistence problems, according to the assumptions cited. Deposits are no longer even touched by the owner, who pays them into a regional government body. On the ground, the examples handled range from areas where rent does not fall below 900 euros to tenants kept at 650 when the neighbourhood market already asks for 800. During the 2010 crisis, moreover, much of the protected housing ended up sold off cheaply, according to one of the participants.

Why doesn't price control stop the rise?

The question runs through the entire discussion. Rental prices have been rising for years, in Spain and in much of Europe, and the measures sold as a remedy have not altered the trend. Some recall that the president of the European Commission has accumulated six years in office without having resolved the so-called housing crisis, and others reply that the problem is not in Brussels but in the lack of supply. In the middle of the exchange, one participant cites a figure: the public debt of the states that should fund protected housing is around 140% of GDP. It remains to be seen, however, where the Brussels plan will lead.

The strangest precedent that appears in the discussion is neither Dutch nor South American. In August 1964, a Spanish regulation obliged every establishment serving meals and drinks to offer a menu with a fixed composition: hors d'oeuvres, soup or cream, a fish dish, meat or eggs with garnish, fruit dessert, sweet or cheese, and bread. Regulating prices by decree has history; getting the market to behave as the decree demands, rather less.