Rent protection in housing; everything has its price

As a tenant and landlord, you need to be well informed about the rental law of housing. There have been many changes recently, and if we are to believe Minister Mona Keijzer, the end is not yet in sight. What is important to know when it comes to rent?

Rent

In summary, rent protection means that the rent of a housing unit must be proportional to the quality of that housing unit. The quality of the living space determines the maximum rent a landlord may charge (unless the point number exceeds a set point number).

The quality of a living space is determined on the basis of the Housing Rating System (WWS). In the WWS, a living space receives WWS points based on various components of the living space, such as the number of square meters, the energy label and the WOZ value. The minister is considering some adjustments, but at this time it is not yet law. The final WWS point number is linked to a maximum rent.[1] There is a WWS for self-contained housing and non-self-contained housing.[2]

Since July 1, 2024, the following categories can be distinguished (price level January 1, 2025):

• The low segment: self-contained housing with a maximum rent up to and including € 900.07 (143 WWS points) and all non-self-contained housing, regardless of point number;

• The middle segment: self-contained housing with a maximum rent from € 900.07 to € 1,184.82 (144 - 186 WWS points);

• The high segment: self-contained housing with a maximum rent above €1,184.82 (187 points or more).

At the high end, the tenant and the landlord can agree on the rent themselves. The rent is not capped at the high end. The WSS point number of 186 points is often referred to in rental law today as the 'liberalization limit'. A rent above the liberalization threshold is referred to as a 'liberalized rent' and the high segment is also known as the 'free sector'.

Enforcement and review

There are several ways in which the maximum rent is enforced. To better protect the tenant, since Jan. 1, 2025, it has been mandatory for a landlord to share with the tenant the WWS point number of the property (and its substantiation) and indicate the maximum rent that goes with it.

A landlord is wise to charge a permissible rent. These days, a municipality can take enforcement action if a landlord charges excessive rent. There are municipalities that have already sent out fanatical enforcers.

A tenant can also have the rent reduced to the maximum rent through the Rent Commission. It does not matter that the tenant agreed to that rent when entering into the lease.

Impact on agreements concluded before July 1, 2024

The middle segment was introduced on July 1, 2024 with the Affordable Housing Act. There are municipalities that have created a "middle segment" themselves before that date through, for example, leasehold terms and/or lower legislation. We will not elaborate on that now.

The main rule of the Affordable Rent Act is that the changes do not affect existing leases. An example:

A rental agreement concluded on May 1, 2020 for an independent living space with 150 WWS points can have a 'liberalized rent' because there was no (rental law) middle segment at that time. Landlord and tenant could determine the rent themselves because no ceiling existed at that time. The municipality could not take enforcement action against the landlord and the tenant could not reduce the rent through the Rent Commission.

If the rental agreement ends and the landlord wants to rent out this accommodation (with 150 WWS points) again, the accommodation will be in the middle segment. The landlord is then not allowed to charge a higher rent than the maximum rent that belongs to a 150 WWS-points property, at least the new tenant will be able to challenge that.

Transitional law

Note, a key exception is that a 'liberalized rent' for an independent living space can still be reduced after one year of transitional law in a specific situation. Namely, if the WWS point number of this independent living space leads to a rent in the low segment. This is an important change, because before July 1, 2024, the system of having the rent checked with the Rent Commission was thus different. We also call this 'unfairly liberalized' rents.

Tenants with a 'liberalized rent' could, before July 1, 2024, have the initial rent assessed by the Rent Commission only during the first six months (and for temporary contracts of up to two years for up to six months thereafter). After that, no more.

For the housing category 'unjustly liberalized' as of July 1, 2024, there is a one-year transitional right to still reduce the rent. An example:

A lease concluded on May 1, 2020 for an independent living accommodation with 120 WWS points has a rent above the liberalization threshold. The tenant does not have the initial rent price tested (in a timely manner) at the Rent Commission. Before July 1, 2024, this meant that the rent was thereby fixed for the entire term of the lease, regardless of the number of points of the independent living accommodation.

On July 1, 2024, the Affordable Rent Act went into effect. The housing unit still has 120 WWS points. After the year of transitional law, i.e. as of July 1, 2025, the tenant can still have the rent reduced at the Rent Commission (without retroactive effect). The municipality can also take enforcement action as of July 1, 2025.

Summary

Residential tenancy law is becoming increasingly complex. This article has discussed in outline one part of rent protection. Of course, there is much more to say on this subject, such as the prohibition of all-in-prices, (capped) rent increases and prescription rules in case of "forgotten" indexations. More on this next time. In any case, know what you are getting into and consult a rental broker beforehand.

[1] By rent we mean the price for the sole use of the (bare) living space. Other fees may not be included in the bare rent.

[2] In another article, we will consider the distinction between these two types of living space. Briefly, non-independent living spaces are rooms in a house (with shared facilities) and independent living spaces are an entire studio or apartment.