The city that banned buy-to-let – and how renters paid the price

Ruby Hinchliffe visits Rotterdam, where legislation to make life easier for first-time buyers has hit the rental market

‘Landlords have no friends in politics anymore,” says Tjeerd Sijtema, one of Rotterdam’s 15,000 civil servants. Last year, City officials made Dutch history when they became the Netherlands’ first lawmakers to introduce a ban on landlords buying properties to let.

Red- rimmed signs warding off landlords were erected in 16 of Rotterdam’s 71 neighbourhoods – where around a third of its housing stock resides. Smug- looking faces shaped like houses stare down at residents who cycle past it in quick succession. Above read the loaded words: “We are working on a healthy housing market here.”

Landlords, it seems, are unwelcome in Rotterdam. Property investors in the UK fear a similar fate awaits. Increasing regulation over the years has whittled down their yields, and now many are seriously considering selling up. In Rotterdam, if an investor buys a property with a tax value of less than €355,000 (£304,000) in one of these areas, they cannot let it out for the first four years. While not technically a “ban”, it works like one.

In 2022, the first year the ban was introduced, the number of properties bought by investors shrunk by 23 percentage points and firsttime buyer purchases rose by 14 percentage points, according to a study by the Erasmus School of Economics in Rotterdam.

The ban also did not hit house prices, which rose by a nominal 0.1pc rise in neighbourhoods where it was introduced, compared with those where it was not.

Nearly every political party praised the ban, calling it a great success after years of lobbying on behalf of would-be homeowners for affordable housing.

Sijtema, a project manager in the City’s urban development department, reckons the country is seeing “a paradigm shift”.

He adds: “There’s no going back now. I suspect it will happen everywhere eventually, but a lot of other countries aren’t as far along as we are.”

Swathes of other cities across the Netherlands have since introduced “buy-to-let bans”, including Amsterdam, The Hague and Utrecht.

But one glaring consequence of the ban is the downward pressure it is having on rental housing supply, which props up those who cannot immediately afford to buy a house – typically younger residents, migrants and fresh divorcees.

The ban also pushed up rents for tenants in regulated neighbourhoods by around 4pc last year, which the Erasmus School of Economics said “undermined some of the intentions of the law”.

Erik Verweij, a city councillor for the moderate-Right party VVD, is worried the ban is constricting Rotterdam’s rental supply. He is a member of one of the few political parties prepared to admit that landlords are a “convenient scapegoat”.

He says : “If you have student debt and earn the average postgraduate salary which only affords around 2pc of homes here, all you can really buy is a parking space. Families are moving out of the city, but we don’t want to become like London – where social housing supply shrinks and unaffordable properties dominate. Ten years ago, this would have been unthinkable.” Almost everyone you speak to in Rotterdam – barring the government – says building more houses is the answer.

Laurian Van Den Berg, of estate agency Huysvisie, is adamant the ban has not helped more families buy houses: stock sought after by investors is not the same as those sought after by families.

Much like Britain, the Netherlands is in a tight spot when it comes to house building. Dutch developers are at the whim of lengthy waits for permits, and EU laws which restrict the country’s nitrogen emissions – a quota they are forced to share with farmers.

Meanwhile, the Netherlands’ housing deficit jumped from 320,000 to 390,000 last year. Over the past decade, the country’s housing stock has only grown by a few per cent. banning landlords from investing in property would have been “unthinkable” in the Netherlands, according to Sijtema.

He says: “Ten years ago, the government wouldn’t have even considered interfering with the free market – especially the Liberals [equivalent to the Conservatives in the UK].”

After the financial crash, property was cheap and rent regulation weak, so the Netherlands’ buy- to-let market – like many countries’, including the UK’s – boomed. But in 2021, stamp duty charged on house purchases by non live-in owners shot up from 2pc to 8pc. The same tax was cut from 2pc to zero for any live- in buyers under the age of 35.

Stamp duty went up again for Dutch property investors at the beginning of this year, to an eye-watering 10.41pc.

Sijtema says: “Investors have gone too far now. They are taking advantage of tenants and charging inflated rents. Little apartments built before the Second World War are going for €1,200 a month – hundreds of euros more than they’re worth.” After 2015, migration into the Netherlands surged – as did economic growth. This heightened demand for rental housing, placing significant strain on the small, unregulated private rental market.

Meanwhile, the waiting list for social housing in Rotterdam – which makes up a staggering 55pc of the city’s overall housing supply – is now five years’ long.

Verweij describes Rotterdam’s buyto-let ban as a “partial success”. “Finding a room under € 800 or € 900 a month is now impossible. And often, landlords will require you to earn three or four times the annual rent in order to be their tenant.

“The problem leads back to the supply shortage. And that will take years, if not tens of years, to solve.”

Evan Bos, 23, is a mental- health worker. He commutes to Rotterdam from The Hague, where a buy-to-let ban has also been introduced. He pays over €1,000 a month for a one-bed apartment, which he can’t quite believe he can afford.

Bos said: “I have friends who are having to live together just to make ends meet. Lots of people who can’t afford to buy are falling into this grey area between social housing and the private rental sector.” Despite the buyto-let ban having next to no impact on house prices in the short-term, there is an acute concern it could add hefty premiums to properties in what could become “sought-after” areas.

Rotterdam is already home to a clear divide. Locals say it often referred to as “the city of two speeds”, with neighbourhoods south of the river trailing behind the north’s affluence and its skyscrapers.

Migrant families rely on rental housing to work in the Netherlands, but investors say their employers can often be unpredictable. To insure themselves against missed rental repayments, landlords typically charge these tenants more.

The ministry of social affairs and employment is currently working on temporary housing fixes for these workers, such as “Portacabins”, so they do not have to rely on the private rental sector.

Some 220,000 Dutch families also rely on migrant domestic labour to keep their houses clean, according to the Federation of Dutch Trade Unions.

Despite this, Prof Korevaar said it is “hard” to raise the question of where migrants will live following the investor ban in the Netherlands.

Meanwhile, Rotterdam is piloting a version of rent controls in Carnisse. Effective from June, the Good Landlordship Act means investors in this neighbourhood can only let their properties with a permit – which is granted under the condition that excessive rents are not charged. Those landlords who charge rents which exceed the maximum cap risk fines up to €90,000.

Civil servants say there are plans to enshrine rental prohibitions in nationwide law next year.

The legislative rent cap is based on a historic points system. Until now, applying this points system to rental agreements has been optional and not law.

Points are based on factors such as location, upkeep, and kitchen size. If a landlord can rack up enough points, then they do not have to adhere to the cap.

At present, the threshold is 142 points – equivalent to around €800 in rent a month.

But City officials are looking at increasing this points threshold to the equivalent of €1,100 in rent a month to cast a wider net.

A binding rent cap means a landlord cannot increase their rent by more than a government-set amount. Currently, this is equivalent to wage growth plus 1pc.

‘Finding a room under €800 or €900 a month is now impossible’