Rent control plan hits new residential property development

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Investment in new housing projects in the Netherlands fell to 282 million euros in the second quarter of 2022, according to a new study by property consultancy CBRE.

In the first quarter, investments totaled 777 million euros and the long-term average is around 664 million euros, CBRE said. “Investment in the construction of new residential properties has only been as low as the last quarter twice in the past seven years,” the researchers say.

Investors had warned that government plans to impose rent controls on many more residential properties would impact new developments.

“There is a risk that the government will fully regulate rents within the mid-market price range, both impacting rents and maximizing rent increases, CBRE said. “This uncertainty is disastrous for new investments.”

Housing Minister Hugo de Jonge announced in May that he planned to extend the current rent control system, based on points for size, location and amenities, to more housing and to fix an upper limit of €1,000 to €1,250.

He also hopes to ensure that some 900,000 new homes are built in the Netherlands by the end of the decade.

However, CBRE said the increase in regulation, coupled with high construction costs, increased local rules and planning issues will hurt many new residential developments.

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