Buy-to-let protection (opkoopbescherming): is it going to be the solution for first-time buyers? Our intern Gijs is going to research it. But is it smart, as an investor, to quickly buy an apartment to let out now? After all, you have to take care of your own pension, and the pension funds aren't exactly providing a nice, secure safety net either. The Senate (Eerste Kamer) has approved buy-to-let protection for homes in sought-after neighbourhoods. Soon, municipalities will be able to decide that in sought-after areas, houses can't simply be bought up to let.
Contents
- More chances for first-time buyers on the owner-occupied market
- Proposal not strong enough
- A final sprint?
- Regulation
- Joining forces
- For now?
The idea is that this way more owner-occupied homes stay available for first-time buyers. First-time buyers are now often outbid by investors, and the home is then often let out at higher prices. We wrote an article earlier about whether investors are the problem or the solution?
More chances for first-time buyers on the owner-occupied market
The cabinet wants to give first-time buyers a better chance of an affordable home to buy. A municipality can then choose to introduce buy-to-let protection. This can be done in neighbourhoods where there's a shortage of cheap and mid-priced owner-occupied homes. But it can also be done if the liveability of a neighbourhood is under pressure from homes being bought up to let.
The municipality has to decide in advance which homes fall within the cheap and mid-priced segment. There will be three grounds for exemption, on the basis of which the municipality can still grant a letting permit despite the buy-to-let protection being in place. These include, for example, buying a home that is let to family, such as parents with children at university. The municipality can also set extra requirements for the landlord in the context of good landlordship. In addition, municipalities can set their own extra grounds for exemption that suit the issues and make-up of the neighbourhood. The law is being introduced for a period of three years.
Proposal not strong enough
The municipality of Utrecht doesn't think the current proposal is strong enough. They would now be able to impose a 3-year owner-occupancy requirement. The municipality of Utrecht would like to see this for an indefinite period. You already see the owner-occupancy requirement with housing association homes that are sold. So the first-time buyers who are having such a hard time now can let the home after 3 years. You now often see that the same first-time buyer who was able to buy a house cheaply is now letting it out again. It's simply too financially attractive to let out your cheap home.
A final sprint?
Last year we saw that the transfer tax measure didn't lead to lower prices for first-time buyers, but actually caused a final sprint on the housing market. So for first-time buyers it became even harder to buy a home. More rental supply did become available to first-time buyers, though. This was because of the large number of homes offered at the start of the year, after the investors had snatched those same homes from under their noses. With the introduction of buy-to-let protection, we expect bidding to be fierce before the end of the year on homes that are very suitable for letting. Investing in property has proven a good investment in every year, if you buy the property for the long term. So homes in a let state will only become more sought after.
Regulation
Investors have nowhere to turn. First-time buyers have nowhere to turn either. The only plan the government has is to regulate. But regulation hasn't yet made for a better housing market. In fact, all the rules have made it even harder for first-time buyers. Our interest rate is far too low. The rise in house prices isn't included in inflation. That's why interest rates are kept artificially low. As a result, our money has actually become worthless. All the increases disappear into the pockets of current property owners. Jan Modaal (the average earner) can suddenly find himself living in a house worth approx. €1,000,000. Simply because he was lucky when he bought the home. Our pensions are worth nothing any more… All of us are looking for every possible way to make our money earn a return. The stock market is shaky because of the big property investor Evergrande, so the least risky option is to invest in property.
Joining forces
What do I think the solution is? The municipality should release land a bit less expensively. All the ‘small’ investors who can spend around €250,000 to €350,000 should be able to invest in these complexes together. That way the municipality ensures affordable homes, and the small investors can earn a return on their money. After all, on their savings account it's worth less and less. Nobody wants that. So let's bring the investors together. That way more suitable homes can be built.
For now?
First-time buyers, don't let the investors put you off. For investors, the sums have to add up. You'll be living there happily, you'll have a lovely home at relatively low cost, and you're getting in on a market where the end is not in sight. Investors? I do understand you. You're dismissed as a greedy grabber, but you see your money becoming worth less and less. Buy homes in the neighbourhoods where first-time buyers aren't yet so keen to live; you'll make the neighbourhood nicer of its own accord by maintaining the home well. With the predicted rise, that can only be a very good investment.
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