FOCUS
Keypoints
- To achieve the necessary sustainability, large investments are needed.
- The sustainability of homes leads to significantly lower energy costs.
- Rent regulation will stimulate sustainability.
- Due to rising energy prices, the difference in housing costs between sustainable and non-sustainable homes will continue to increase.
Sustainability of Dutch homes: the perspective of the tenant
A year ago, we reported on the significant challenge in the Dutch housing market, where millions of homes need to be made more sustainable, in addition to the construction of new homes. Many of these homes are rental properties, owned by housing corporations and institutional investors. Making a single rental home Paris Proof costs tens of thousands of euros per property. These costs are entirely borne by the landlord, while tenants benefit from lower energy costs due to improved insulation, installations, and solar panels. Additionally, living comfort increases due to a more consistent indoor temperature and improved indoor climate. In this Focus, we will delve deeper into energy costs and the role of tenants in sustainability efforts.
The dilemma of the split incentive
When making homes more sustainable, the dilemma of the split incentive arises. When landlords invest in energy-saving facilities, the current tenants benefit from lower energy costs. To implement sustainability measures, tenants must agree, with 70 percent of them needing to consent for complex-wide sustainability initiatives. Tenants can insist on no or only a minimal rent increase as a result of the sustainability efforts. Adjustment to the higher market rent of the sustainable homes can only occur when the property becomes available and is rented out again, with the energy savings fully taken into account. The extent of the energy savings depends on various factors.
Lower costs through sustainability
The energy crisis in 2022 demonstrated that high energy consumption makes households vulnerable to price increases. The average Dutch household spends about 5 percent (CBS, 2023) of disposable income on energy bills, which amounts to an average of €189 per month, including subsidies and tax discounts. The exact cost depends heavily on consumption, which is influenced by energy prices, household composition, and the energy label.
Energy prices have risen sharply in recent years. Until 2020, they followed inflation more or less, but the war in Ukraine starting in February 2022 caused a significant spike in gas prices. Although prices dropped slightly in 2023, they were still 90 percent higher in 2024 compared to 2015. Because district heating prices are linked to gas prices, they have risen accordingly. Electricity prices show a more stable trend. Due to the energy transition, an increasing amount of electricity is being generated sustainably. As a result, the development of electricity prices is even below that of general inflation (CBS, 2025).
Household composition is a second important factor for energy costs. Data from Nibud shows that a four-person household in an average terraced house has about 50 percent higher energy costs than a one-person household in an apartment. However, consumption per person decreases significantly in larger households. In addition to household composition, the way energy is consumed can vary greatly between households. For example, charging an electric car, using inefficient appliances (such as old refrigerators or dryers), time spent in the home, and desired indoor temperature can significantly influence energy consumption.
he third factor is the energy label. With the same household composition and equal prices, the variable energy costs of a home with label D will decrease by about 25 percent when upgraded to label A. When upgrading from D to Paris Proof (label A+++), there will be a reduction of about 50 percent in costs. This translates to €80 to €140 lower variable monthly costs based on average energy prices in 2024. Additional savings can be achieved by using solar panels. Furthermore, for homes made Paris Proof, there will be an additional saving of around €20 per month on grid management costs since a gas connection will no longer be necessary. In addition to lower energy costs, households will also enjoy more comfort. A well-insulated home experiences fewer temperature fluctuations, and updated installations provide a better indoor climate. Finally, many sustainability projects will also address other aspects of the home, such as cosmetic maintenance of bathrooms, kitchens, and common areas.
PRICE INDEX ENERGY (2015=100)
Source: CBS, edited by Achmea Real Estate (2025)
VARIABLE ENERGY COSTS PER MONTH*
* Based on average consumption in 2022 (excluding solar panels) and average prices in 2024, assuming household composition (multi-person household) and energy prices remain the same during tenant turnover. Source: CBS, edited by Achmea Real Estate (2025
Right of consent
Tenants must provide prior consent to a landlord's plan to make their home more sustainable. The landlord must present a reasonable proposal to the tenants regarding the implications of the sustainability plans. It is important to involve tenants as early as possible in the process to prevent potential objections and to reach an agreement on any possible rent increase. Tenants can then indicate whether they agree or disagree with the sustainability measures. Current legislation states that a proposal is considered reasonable if 70 percent of all tenants agree, with non-responding tenants also counted. There is a bill in progress, "Adjustment of the Right of Consent and the Right of Initiative," which aims to change the basis for the 70 percent requirement from all tenants to 70 percent of the tenants who have responded. This is intended to facilitate complex-wide sustainability efforts.
Rent regulation provides opportunities for additional rent
For landlords who invest in making their property portfolio more sustainable, it is essential that the initial investment translates into higher rental incomes and increased property values. After sustainability upgrades, the market rent will rise, allowing for higher rental incomes during tenant turnover. The increased market rent will also have a direct positive effect on the underlying appraised value of the property. More about the impact of sustainability on values can be read in our Whitepaper "Sustainability Pays Off in the Long Term.".
Landlords can reasonably expect to agree with current tenants on a small rent increase that reflects a portion of the expected energy savings. As a result, tenants will still benefit in their total housing costs, given the same household composition, and enjoy more living comfort.
Recent rent regulations have introduced possibilities for increasing the rent of regulated rental homes after sustainability upgrades. In the new WWS system, which came into effect in mid-2024, more points are awarded for higher EPC labels, thus increasing the maximum reasonable rent. This translates to an additional €170 per month for upgrading from label D to A, and approximately €270 for upgrading from D to Paris Proof (A+++) as the maximum reasonable rent per month (see table).
However, it is important to note that the significant rent increase based on WWS points is not possible in all situations because the market rent may be lower and, in many cases, can only occur upon tenant turnover. If the property falls within the regulated middle segment, a higher rent growth can be applied since within this segment, the rent can grow in line with the development of the collective labor agreement wages + 1 percent until the (increased) maximum reasonable rent is reached. Normally, the rent of a middle-rent home, which is rented based on the maximum reasonable rent, would only increase with inflation. This higher rent growth will lead to a significant improvement in the direct return over time.
IMPACT OF ENERGY LABEL ON WWS RENTAL PRICE
Source: Dutch Government, edited by Achmea Real Estate (2025)
Larger differences in energy costs expected
Energy prices, particularly for fossil fuels such as gas, are expected to rise in the coming years. Recent history has shown that geopolitical tensions can quickly drive up gas prices in Europe. Additionally, the introduction of the European Emissions Trading System ETS2 in 2027 will require emission rights for the CO2 emissions of the built environment. Based on current expectations, this will increase the natural gas price by approximately 11 cents per m³, leading to about €10 in extra monthly costs for an average household with a gas connection.
As prices rise, energy costs will take up an increasingly larger share of housing costs, and the difference in housing costs between sustainable and non-sustainable homes will widen. Furthermore, more information will emerge in the coming period regarding the implementation of the EPBD IV in Dutch policy, which mandates member states to make a portion of the existing housing stock more energy-efficient. This may lead to additional policies aimed at accelerating the sustainability of homes.
These various developments will increase the attractiveness of sustainable rental homes, which will ultimately be reflected in rental prices. It is therefore expected that sustainability will not only make a significant contribution to achieving climate goals but will also become increasingly financially rewarding. As tenants of sustainable homes benefit from lower total housing costs, there is a win-win situation.
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