Transforming rental housing in the Netherlands into an investable asset class

Following regulatory and structural changes to the housing and mortgage market, BTL mortgages are in increasing demand in the Dutch private rental sector.

In the wake of the 2008-09 financial crisis, the Dutch government and financial regulator introduced a series of changes that were designed to protect the financial system and housing market for the future, including:

• A limit to high loan-to-value mortgages, which required new homeowners to save for a deposit. Prior to 2008, it was the market standard for borrowers to take out a 100 per cent plus loan-to-value mortgage that could go as high as 120 per cent based on the property’s foreclosure value.
• A change to the tax regime, which previously allowed homeowners to offset their mortgage interest against various taxes, encouraging buyers to take out as large an interest only home loan as possible.
• A reduction in funding for social housing with the government encouraging social Housing Associations to sell housing stock to private investors.

There have been further social and demographic changes, with population growth and decreasing family sizes leading to an increased demand for flexible and temporary housing solutions.