Property rental risks and opportunities
Renting out property can be a good investment. As a landlord, you do need to be familiar with the pros and cons of renting as tenants are well protected in the Netherlands. As a landlord, you also need to take into account your mortgage lender (the bank), insurance and co-owners in a homeowners association.
There are a few misconceptions about the legal position among landlords. You see, what is defined in the tenancy agreement does not always really represent the rights and obligations of the landlord and tenant. Below, we will explain a few points of interest about which uncertainties exist (based on our experience). Please read the following carefully. Any questions about your specific situation? Please contact the specialist.
Always ask yourself what your reason is for renting out. Are you thinking of long-term investment? Renting out until you can live there (again), or selling the property – vacant or rented out? This helps you easily determine which of the points below might apply to your situation.
The Property Valuation System / Scoring system
The Netherlands uses a property valuation system for rental properties – also referred to as the scoring system – to help establish the quality of the rental property. This is used to help establish the maximum rent for – in short – the cheaper and smaller, less luxurious properties. Points are primarily awarded based on surface area, quality and energy index of the property in question. As of 1 October 2015, the new property valuation system took into effect, for which e.g. the energy label and the Valuation of Immovable Property (Dutch WOZ) play an important role. An example of the scoring system can be found here.
If the initial rent (of tenancy agreements after 1 July 1994) lies above the rent deregulation threshold (this is equal to the maximum rent of the Law on Housing Allowance (Dutch Wht), rent protection for tenants is largely inapplicable. As of 1 January 2015, the threshold was set at € 710,68. This rent can be agreed upon if the property (reference date 1 October 2015) has a score of 146 or higher. If that’s the case, parties are free to agree on the price of (basic) rent. However, there does need to be a separation between the rent and (the advance on) monthly service fees. The service fees need to be paid annually on the basis of the actual costs made by the landlord. Curtains, hangings/furniture are also perceived as service fees. The rent can be increased once per 12 months.
Under the rent deregulation threshold? In that case, the tenant can hold the landlord to the maximum rent that the property valuation system indicates. See this table. A tenant of a property with deregulated rent is entitled to rent protection upon the termination of the rent. Even for semi-furnished or furnished properties.
Energy label and energy index
When renting out property, it is mandatory to provide the tenant with an energy label. As of January 2015, the government will also be enforcing this rule, under penalties of up to 405 Euros. In principle, a simplified energy label suffices, available online via energielabelvoorwoningen.nl. However, one of the most important points for the scoring system is the energy index. A simplified label does not include the energy index. A physical inspection of the property by a certified party is necessary in this case. Please make sure you have the correct label.
Additional points are awarded for monuments: if you are renting out property that has been designated as a national monument, additional points may be awarded. This will probably deregulate the property faster.
In large cities, such as Amsterdam, a housing regulation applies. Cheaper and smaller, non-deregulated properties can only be rented out if the tenant is in the possession of a housing permit. Anyone who does not obey this law is liable to punishment and runs the risk of the municipality of Amsterdam imposing an order for periodic penalty payment(s) or (in the future) an administrative fine of a maximum of € 18.500, for the tenant €340. A risk you don’t want to take! Want to know more about how this is set up for the Amsterdam housing market? Please click here.
Review by the Huurcommissie (Rent assessment committee)
In principle, you are free to agree on any rent with the candidate tenant. However, the tenant always has the right to have the rent assessment committee review the agreed upon rent within six months after the start of the tenancy agreement. If the rent assessment committee concludes that (based on several property valuation points) the rent is too high, the rent needs to be reduced until the maximum rent. The landlord will need to refund the overpaid rent. One may appeal against the decision of the rent assessment committee with the district court, although the court is also bound to the property valuation system. If the initial rent was too high, damage can amount to thousands of Euros, regardless of whether a housing permit was required.
At the moment, tenants have the option under the law to have their rent reviewed by the rent assessment committee within six months after the tenancy agreement has been concluded. In case of a temporary tenancy agreement, the six-month term is extended to the entire duration of the temporary agreement plus an additional six months (in case parties decide to extend the tenancy agreement).
Huurcommissie (rent assessment committee)
The Huurcommissie is an independent court that takes decisions in disputes between landlords and tenant about e.g. increase in rent, rent reduction or annual payment of service fees with respect to non-deregulated rent. The rent assessment committee also makes decisions about any defects and rent reduction (as long as the defects have not been fixed). Tenants and landlords contact them for any questions relating to renting (out) property.
We strongly insist that people have a scoring performed prior to renting out their property. This gives you a better chance to calculate your risks, and helps you determine whether you want to improve the property so that you can offer the property in the free sector housing, or ask non-deregulated rent. Of course, we can help you with this.
An important and often underestimated point is the insurance of the rented property. The owner needs to make sure the property is insured against fire or external damage (home insurance). Are you a member of the homeowners association? In that case, your association takes care of this insurance. This type of insurance often includes a so-called ‘rental provision’. This means that home insurance also applies if the property is rented out. Make sure you verify this and contact the relevant insurance company when in doubt. No homeowners association? Please read your policy extra carefully and conclude a new or other insurance, if necessary.
In case of furnished rent, you also have to deal with your inventory insurance. This is often confused with fire and theft insurance. A lot of insurance companies do not provide fire and theft insurance for rentals, because it has been taken out in your name. However, it is often possible to easily change your insurance to an inventory insurance, which does cover rentals. In this case, too, we recommend that you work this out with your insurance provider, to prevent any inconvenient situations. A tenant needs to insure his/her own things.
As of July 2016, thanks to a change in legislation, it will be possible to temporarily rent out property without the tenant being able to appeal to rent law. For independent properties, it is possible to conclude the tenancy agreement for a maximum period of 2 years. After this period (the period can be shorter), the tenancy agreement will expire without requiring any notice. The landlord does need to warn the tenant in time before the end of the tenancy agreement, or the agreement will not expire after all.
In most cases, for instance in a period of more than 2 years, a tenancy agreement cannot be simply terminated by the landlord. Even if a term of – for example – three years has been specified in the tenancy agreement. Do you as the owner want to conclude a temporary tenancy agreement with the guarantee that the tenant will (have to) vacate after the agreed-upon period (longer than 2 years)? Then this obligation to vacate needs to be included in the tenancy agreement and the original occupant needs to return to the rented property after the agreed-upon tenancy. This means that you can only rent out temporarily if you, for instance, are going abroad temporarily and want to return to your home after that period. Or, if you bought a house you can't move in to (yet), but will be able to after termination of the tenancy. Providing tenants with the possibility to extend the tenancy considerably diminish your intentions of returning to your home and make the possibilities to achieve the termination of rent considerably weaker. If you decide not to return to the property after all, the tenant is no longer obliged to vacate.
If a tenant wishes to temporarily sublet to someone else, he/she required permission from the landlord. JLG does not offer any services in case of subletting.
Short-term rental under the Dutch Vacancy Act
Short-term rental is also possible with a permit from the mayor and city council members, under the Dutch Vacancy Act. You can apply for this permit if e.g. you are unsuccessful in selling your house. The minimum rental period of the property is at least six months. The permit is granted for 5 years. A tenant cannot appeal to rent protection in case of short-term rental under the Dutch Vacancy Act. The rental agreement needs to meet the necessary formalities that need to be strictly maintained. The terms need to be taken into account as well. We can help you with that.
Do you want to know more about the Dutch Vacancy Act and how we can help you with this? Click here.
Please remember the following:
- A lot of private properties are mortgaged. Most mortgage agreements contain a clause (rental provision) that forbids you from renting out your property without (written) permission from the mortgage bank. We do not verify this permission with your bank. It is your own responsibility to arrange this permission (in writing) with your bank prior to renting out.
- You need to inform your insurance company. Notify your fire and theft insurance company, building insurance and any others about the fact that you are (temporarily) renting out your home.
- Verify whether you need prior permission from the homeowners association or cooperative society.
- Verify the tax-related consequences of renting our your property with your tax consultant.
Frequently heard inaccuracies of renting
- Expats cannot appeal to rental rights to which Dutch citizens can appeal. This is false. The law applies to everyone, including expats. Foreigners can appeal to the exact same rights as any Dutch tenant.
- If I rent out a furnished property, I can demand significantly higher rent so that I can rent out property with of score of under 146 points at a commercial price. This is false. You have to keep to the scoring rent. New furniture can be deducted over a maximum 60 months. This means that if you also include your new furniture in your rent with a purchase value of e.g. €10.000,-, you would only be able charge a maximum of €167,- per month. For older furniture, this price is a lot lower, as the replacement value counts in those cases. Please also be aware that if you’re renting out in the free housing sector, you need to divide the rent into the (basic) rent and the compensation for furnishings (and other matters and services) and that you do not set the rent for furnishings too high. As far as service fees and fees for furnished rent are concerned, price protection exists and tenants can reclaim overpaid rent.
- I can temporarily rent out if I offer furnished property. This is false. Renting out furnished properties does not have anything to do with being allowed to temporarily rent out or not.
- I can use service fees to considerably increase basic rent. This is false. Service fees for e.g. cleaning the stairs, or for gas, water and electricity expenses need to be estimated realistically at all times and are calculated annually on the basis of the actual costs. As a landlord, you are required to provide the tenant insight into these costs. It is not permitted to make any profit on these expenses.
Prohibition of all-in rent
NB: NEVER offer ‘all-inclusive’ rent. Even if the property scored over 146 points, tenants can still request the rent assessment committee to make a division in the (basic) rent and service fees. In that case, the rent assessment committee needs to establish the (basic) rent on 55% of the maximum rent for the property, even if the property scored over 146 points and can be rented out above the price of € 710,68. This rent reduction cannot be recovered.
Sale of the rented property
The rule is: rental agreements cannot be terminated by sale. The new owner is bound to the existing tenancy agreement. Pay extra close attention when you need to vacate the rented property because you sold it in the meantime. Even if a tenant has agreed to cooperate on vacating the house in case of a sale, he/she can still make it very hard for you. He is usually not obligated to move out. Therefore, you should always, before signing the deed of conveyance, have the tenant (and his/her partner) sign a notice in which he/she agrees to leave the property before a certain date. Even more important: verify before you rent out whether the tenant can be forced to vacate.
Above-stated information is only a selection of the most important points of interest with respect to renting out your property. Please take the time to read this information carefully before you decide to rent out. Consult an expert real estate agent who can assist you with any questions you may have and knows how the rental market works. Unfortunately, in the rental industry of all places, there are agencies that are often insufficiently up to date (or totally out of the loop) of rent law. This can result in major problems for you if they give you the wrong advice. We would love to provide you with expert advice to prevent disappointments.
For more information and a very extensive file about rental properties, we would like to refer your to the website and rental file of Rijksoverheid (Dutch government).
For specific information about renting in Amsterdam, please click here.
If you are curious about the questions other people have, just click for the 10 most frequently asked questions.
Your rental expert
Renting out property is a specialism that cannot be underestimated. Complicated law and legislation, obligations and conditions don’t always make it easy. That’s why it’s important to hire a party that knows the market and legislation and also has extensive experience in carefully renting out properties.
JLG Real Estate happens to be one of those companies! We are a real estate agency that specialises in renting out properties, a specialism that a lot of regular real estate agencies – besides the sale of properties – often put on the backburner.
We rent out quickly! Thanks to our unique marketing concept, we are capable of renting out properties faster! Our emphasis lies on putting your property on the market as extensively as possible.
We achieve maximum exposure for your rental property:
- Your property is listed on the most important property websites including sites on which only certified real estate agencies can place their listings, such as Funda, Parasius Huurwoningen, Jaap.nl, Craigslist and MVA.nl.
- Your property is included in an exchange with all rental agencies in the region. They rent properties through us on a regular basis on behalf of companies such as Philips, Shell, Tommy Hilfiger, Booking.com, Uber, etc.
- Your property is included in a weekly mailing with our listings that is sent to more than 5,500 international companies and interested parties.
- If desired, we will place an eye-catching For Rent poster or quick sign on your window.
- We are present everywhere through our social media like Facebook, Twitter, Youtube and Instagram. In short, list your rental property with us and you’ve got the entire market covered!
Once the service contract is a fact, we get to work. First of all, our ladies on the office staff will compile a (digital) file. Subsequently, the real estate agent will register your property in the exchange system, where your property is presented to the best of our abilities by means of a catchy text, photos and perhaps completed with a floor plan (or even video) of your property on various websites such as Funda.nl, Parasius.nl, MVA.nl, Craigslist and of course JLG.nl.
Besides the online presentation, dozens of other means are used to maximise the exposure of your property. We also appeal to our unique network of (international) companies by means of a weekly mailing, with more than 5,500 subscribers! Furthermore, all of our fellow real estate agents, rental bureaus and relocators will be informed as well.
As soon as the property is on the market, potential tenants can come visit your property. These appointments are announced in advance by our office staff.
If a candidate shows up with a rental proposition, your real estate agent will, on behalf of and together with you, start a possible negotiation about the conditions, in order to come to the right decision. As soon as the main points have been agreed upon, we perform a background check of the tenant in order to exclude potential risks regarding payment behaviour, habits and any harmful intentions as much as possible.
All agreements are summarised in the tenancy agreement, drawn up in Dutch, and in some cases translated into English. As soon as both parties have signed the tenancy agreement, the tenant is expected to pay his first month of rent and a deposit, for which the tenant will receive an invoice from us.
At the start of the tenancy, the conveyance will take place. At this time, an inspection report will be drawn up, listing the condition of the property. This report includes an extensive photo shoot to get the full picture of the situation at the start of the tenancy. This report and the photos will also be the foundation for the assessment of the situation when the tenant moves out again.
As soon as the conveyance has been completed, the rent and deposit will be transferred to your bank account, minus the commission that is due. All future payments are, in principle, paid directly to the landlord by the tenant, unless there is a manager present.
During the tenancy, JLG remains your real estate agent, which means you can always ask us for any advice or assistance. For example, if you wish to index your rent or in the event of a dispute with your tenant. We would love to help you out.
Once the tenancy agreement is terminated, another inspection will take place, during which the condition of the property is established and compared to the situation at the beginning of the tenancy. If the tenancy agreement included an advance payment for expenses such as gas, water and electricity, we can also calculate the actual costs, so we can charge the difference.
No Cure No Pay
We do our utmost best to select the most suitable candidate tenant for you. For this service, we charge commission to the client, meaning you, as a landlord/property owner. This commission amounts to 8% (9,65% including 21% VAT) over the rent of maximum 1 year, which roughly corresponds to one month of rent excluding VAT. This means that if you enter into a tenancy agreement with a tenant for several years, you are only due commission over the first year. The subsequent years are free of charge. This is all on a no cure no pay basis!* For contracts shorter than 12 months, the commission is calculated in proportion per month, with a minimum of 1.210 Euro including 21% VAT.
Since we only charge commission to one party, we are interesting to all companies and individuals, as they don’t have to pay us commission for finding suitable property. This also provides you with the guarantee that we put your interest first, because that’s what you pay us for!
* In the event that the contract is withdrawn, you will only be charged with the costs for advertising at 70 Euros including VAT.
Dutch Vacancy Act
If your house is (going to be) up for sale, you may also choose to rent out the property without the tenant being able to appeal to important and often inconvenient rights from rent law. In this case, we are talking about short-term tenancy under the Dutch Vacancy Act.
What does the law state?
The Dutch ‘Leegstandswet’ (Dutch Vacancy Act; law of 21 May 1981, Staatsblad 337) provides the possibility to temporarily rent out vacant properties that at the time of submitting the request:
- is intended to be demolished or reconstructed;
- is put up for sale by the owner who was the occupant the year before the vacancy.
This requires a permit from the Mayor and City Council members. The Dienst Wonen (Housing department) is the competent authority in Amsterdam that grants the permits.
In this explanation, we limit our information to short-term tenancy at the time of sale.
Property up for sale by the owner/occupant can be temporarily rented out with a temporary rental permit for at least six months up to a maximum of 5 years. In case of intended sale, the permit cannot be issued.
If the requested permit is granted, articles 206 paragraph 3, 232, 242, 269 paragraph 1 and 2, 270, 271 paragraphs 4 through 8, 272 through 277, 278 paragraphs 1 and 2 and 281 of Book 7 of the Dutch Civil Code do not apply. This means the temporary tenant is not entitled to rent protection. Instead, strict regulations apply regarding rent protection on the basis of article 16 of the Dutch Vacancy Act.
The short-term tenancy contract should state the number of the permit.
A short-term tenancy agreement may be concluded for a period of at least six months.
The notice for the temporary tenant is at least one month.
The notice for the landlord is at least three months.
Fees are due for the consideration of the application.
By submitting the request, it will be processed and certain fees will be payable, even if the permit is not granted. If the permit is not granted, restitution of no more than 25% of the fees due may be refunded. The applicant will receive an invoice as soon as the request has been taken into consideration.
JLG Real Estate can submit your request for you. One major advantage while renting out under the Dutch Vacancy Act is that rent can be determined at one’s own discretion. This means you are not bound to the maximum rent in conformity with the Property Valuation System.
JLG can only start the process of finding a suitable candidate once the permit has been granted, not before. JLG Real Estate cannot provide any guarantee that the requested rent will be accepted.
Sale of the property
The number one condition to rent out under the Dutch Vacancy Act is intended sale. For that reason, your property needs to be put up for sale by JLG Real Estate, at a reasonable price. JLG Real Estate will actually attempt to sell the property as long as the property is not being rented out. Everything is in accordance with that which was defined and agreed upon in the service contract for sales (Opdracht tot Dienstverlening bij Verkoop).
For the application of the permit and start-up costs for the sales and rent, a one-time payment is due that amounts to 200 Euros, including 21% VAT. Upon the conclusion of a tenancy agreement or sale, the standard commission applies as defined in the relevant service contract. No cancellation fees are due.
Before you decide to rent out your property, we offer custom rental advice during an optional free introductory visit to your property. We can advise you on the realistic rental price and any changes that could be made in order to promote a successful rental.
Eye appeal is buy appeal. That’s why a good presentation of your property is vital. JLG offers you the opportunity to have professional photos taken, completed with (digital) floor plans or even videos (if desired).
The service contract can be provided digitally via this link here