The Dutch economy is gradually improving and showing modest growth. House sales are picking up and the decrease in house prices has flattened out. 

It is not only Dutch, but also foreign investors, aiming at a stable return in long term investments, who are increasingly looking at the Dutch residential market. This article examines the attractions of the Dutch housing market and considers potential pitfalls.

The Dutch housing market

Approximately 75 per cent of the three million rented houses in the Netherlands belong to housing associations. These associations are responsible, among other things, for letting social houses, defined as homes for which the monthly rent is under €711. Housing associations may only let social housing to people with a maximum yearly income of €35,739 gross.

The social housing sector is highly regulated, unlike the more expensive private housing sector (where rents are higher than €711).

In the social housing sector, the rent payable depends on the quality of the house and is based on a points system, although, as noted earlier, rents in this sector are subject to a ceiling figure of € 711. In addition, rent indexation is regulated. As at 1 July 2015 the maximum rent indexation was 2.5 per cent (inflation + 1.5 per cent) for people with an income of €34,329 or less, 3 per cent for those with an income between €34,229 and €43,786 and 5 per cent for those with an income of more than €43,786. These different indexation levels were introduced to motivate tenants to move up the housing ladder and to ensure that the cheaper homes remain available for people with a relatively low income.

In the private sector however, tenants and landlords have more freedom to agree the rent and services provided and there is no maximum rent and indexation is not capped.

In general, investment opportunities in the private sector really only exist in relation to those properties which generate a rent of between €711 and €1200. This is because if the monthly costs for housing exceed €1200, most people will consider buying a house rather than renting it. However, there is still a shortage in the supply of houses in the €711–€1200 range and the Dutch housing market is currently focused on satisfying the increasing demand for such properties.

Investors looking at the Dutch housing market will not only need to consider the commercial issues noted above, they will also have to comply with specific Dutch legal and tax issues. Some of these issues are highlighted very briefly below.


First, the good news for investors is that real estate transfer tax (RETT) for private houses has been decreased to 2 per cent, compared to the 6 per cent payable on transfers of commercial real estate. This decrease is specifically aimed at boosting the recovery of the housing market.

Landlord tax

Landlords with a portfolio of more than 10 social housing units (whether the landlord is a housing association or a private investor) will have to pay a special tax (“verhuurdersheffing”) on the value of their portfolio of 0.491 per cent (to be increased to 0.536 per cent in 2017), subject to a maximum of €15 million per taxpayer. This tax has been introduced to lower the national debt and also to improve the housing market. (NB: This landlord tax is not applicable to houses in the private sector.)


Where a housing association wants to sell a portfolio of houses to third party investors, the sale requires the approval of the Dutch Minister of Housing. The approval procedures vary depending on whether the sale concerns social or unregulated housing. Where the sale involves 90 per cent or more unregulated housing, a public offering will be sufficient. However, where the sale involves 90 per cent or more social housing, the houses must first be offered for sale to the existing tenants, and after that to other housing associations. Only then may the houses be offered for sale to the market.

In addition to the ministerial approval required, in case of the sale of social housing all relevant local authorities will also have the opportunity to give their view on the proposed transaction from a public housing perspective.

Tenant associations

Finally, investors in the residential property market will have to deal with tenant associations during negotiations: where an owner owns more than 25 rental houses (in either sector) the Landlord and Tenant Consultation legislation will apply (“Overlegwet”) will apply. In such cases the following requirements apply:

The landlord of more than 25 houses will need to ensure that the tenants form a tenants’ association, and this association must be involved asset- and property management issues. The association has the right to be kept informed regarding these issues by the landlord, and also regarding decisions to sell and/or purchase property. A landlord may not take any asset- or property management decision before the tenants’ association has had the opportunity to meet with the landlord or give the landlord written advice. The landlord may refuse to accept the advice of the tenants’ association, provided that it gives a reason for doing so. The tenants’ association can take the matter to court if it is not satisfied that the landlord has complied with these requirements. The limited case law we have in this area indicates that the courts will be slow to prohibit actions taken by a landlord, provided that the landlord has complied with its obligation to keep the tenants’ association informed and has given good reason as to why the association’s advice is not being followed.


The Dutch residential market has the potential to be very attractive as an alternative asset class with stable returns for long term investments. Buying portfolios from social housing associations may be interesting, although there are some constraints, especially the landlord tax and the various approvals required from stakeholders. The private sector with rents of between €711 and €1200 seems to be attracting an increasing number of investors, but there is still a shortage of properties in that sector. This may account for the current trend of investors developing their own properties in this area of the Dutch housing market, as part of their investment strategy.