Residential

Market rents of homes owned by institutional investors were 3.1 per cent higher in the first quarter than a year earlier, up 0.7 per cent from the fourth quarter. Vacancy in complexes leased by institutional parties fell from 1.5 per cent in the fourth quarter to 1.2 per cent in the first quarter. In some major cities, rental properties are now being outbid. The severe tightness in the rental market thus continues due to limited new construction activity and the leasing out of housing complexes by private investors in particular. Second-quarter figures for both rents and vacancy rates are not yet known at the time of writing (source: MSCI).

Initial yields for rental properties (prime Amsterdam) rose sharply by 20 basis points in the second quarter compared to the first quarter. Compared to a year earlier, the increase is 90 base points (source: C&W). The risk-free rate remained stable in the second quarter, further narrowing the spread to 160 base points. With this, the spread is still relatively low compared to recent years. Average initial yields of rental properties owned by institutional investors continued to rise in the first quarter of 2023 (source: MSCI). Figures for the second quarter will be available later, but given the development in prime yields, a further rise seems almost certain.

With the fall of the cabinet, uncertainty about the regulation of the middle rent remains. Just before the summer recess, the Affordable Rent Bill was still sent to the Council of State for advice. In doing so, a number of changes were applied following the consultation in early 2023. The most noteworthy of these are an additional indexation of the maximum reasonable rent and limiting the effect of the WOZ cap to 186 points. The extra indexation will ensure that the upper limit of the regulated middle rent will be around 1,150 euros as of 1 January 2023 (was 1,123 euros). Due to the fall of the cabinet, there is a good chance that the House of Representatives will declare the bill controversial; the vote on this will take place after the summer recess. Declaring it controversial means that only a subsequent cabinet can table the bill. With elections in November this year, this would mean that a decision would not be taken until 2024. Depending on the coalition agreement, this could see the bill amended or withdrawn. For investors in Dutch rental properties, this means that uncertainty persists and investments are stalled.