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.
Deregulation rent
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 :Wet op de Huurtoeslag), rent protection for tenants is largely inapplicable. For 2019, the threshold was set at € 720,42. This rent can be agreed upon if the property has a score of 145 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 a 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.
Housing permit
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 the 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.
Source: Huurcommissie.nl
Scoring system
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.
Insurances
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.
Temporary rent
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.
Subletting
If a tenant wishes to temporarily sublet to someone else, he/she required permission from the landlord. Amsterdam Rentals 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.