How the purchase protection regulation may affect you

Various cities are introducing a purchase protection regulation to prevent investors from "hijacking” homes from starters. Here is how this regulation affects people looking to buy a home and here are the benefits it brings to the housing market.

The reason for the introduction of the purchase ban is that there is a need for regulation in the local housing market. Relatively cheap properties are often bought up by investors and then offered for rent at high prices. As a result, starters and families find it difficult to buy a suitable place to live. We see that they have to make several offers before managing to get hold of a property.

What is purchase protection regulation?

The purchase protection regulation is a new regulation in the Housing Act that came into effect on January 1, 2022. This measure gives municipalities the option of introducing a letting ban for existing cheap and medium-priced owner-occupied properties in certain cities and areas. The purchase protection must ensure that these homes remain available to buyers who are looking for their own homes, starters in particular. The rental ban applies for four years after purchase. Homes that are already rented out are not covered by this measure.

Low interest rates and additional mortgage options made real estate investments extra interesting for many investors. In the last quarter of 2020, 40 percent of owner-occupied homes in large Randstad cities were sold to investors. Starters and investors often want to buy the same type of homes. This resulted in starters buying fewer homes, partly because real estate investors are ahead of them due to having more financial options, as well as being able to offer sellers more financial security.

Amsterdam leads municipalities introducing regulation

At the end of last year, Amsterdam was the first municipality to publish detailed plans. The legislator has given municipalities the freedom to set an upper limit on the “cheap and medium-sized” homes to be protected. Municipalities make their own choice here. Amsterdam stretches the conditions to the extreme: for all owner-occupied homes up to 512.000 euros WOZ value, a rental ban will apply after purchase. Rotterdam opts for the NHG (National Mortgage Guarantee) limit of 355.000 euros, while Haarlem has 389.000 euros as a limit.

Many other large municipalities want to introduce similar rules for investors. These are not only large cities (Eindhoven, Rotterdam, Utrecht, Leeuwarden and The Hague) but also smaller cities. In the Amsterdam region, this would include places like Almere, Amstelveen, Haarlem and Hoofddorp. Also, several villages in Brabant are considering making use of this possibility to give starters more options to buy a property. It means that an investor needs to do extra research to find out if he can rent a property out.

A step in the right direction

With this proposal, it will be more difficult for investors to buy affordable houses and give starters and families more possibilities to buy these properties. Unfortunately, this measure alone is not sufficient to solve the housing shortage in the real estate market in the Netherlands. There is a serious shortage of houses and considerable additions will have to be made in the coming years but, at least, this is a good new rule that gives more possibilities for private buyers.