Changes in the Housing Market – More Possibilities for First-time Buyers

Lately you may have noticed an increase in number of affordable properties available on Funda. “Affordable” is, of course, relative, depending on each buyer’s financial situation, but here we’re talking about homes within the €250,000 to €500,000 range - an attractive bracket for many first-time buyers. Let’s unfold the cause of these changes in the housing market.

What’s Happening in the Dutch Housing Market?

Recent months have brought a noticeable shift in the availability of homes suitable for starter buyers. For renters, the situation is becoming increasingly challenging. Tenants on temporary rental contracts are facing the possibility of landlords opting not to extend their contracts or, in some cases, even offering compensation for early move-outs. Those looking for a new rental property are discovering a highly competitive market with fewer options and rising prices. On the other hand, buyers are experiencing more choices available on the market. Properties in desirable areas are still selling very fast and above asking price, but there are some properties that stay on the market longer or even are sold below the asking price - a rare trend in recent months.

Why the Sudden Change?

This shift is largely due to recent changes in Dutch rental regulations, which have created new pressures for landlords and, as a result, opportunities for buyers. Key legislative updates include:

• Affordable Rent Act: Effective July 1, 2024, the act aims to regulate affordable housing in a way that impacts both rental pricing and availability.
• Points System Requirement: Landlords must now adhere to a mandatory points-based system, which classifies rental properties based on criteria such as size, condition, and location, placing restrictions on the maximum rent.
• End of Temporary Contracts: The law now prohibits new two-year temporary rental contracts, meaning only indefinite contracts are allowed, giving renters more security.
• Restrictions for Landlords: The government has enacted stronger tenant protection measures, giving less flexibility to landlords regarding their rental terms and pricing.

These changes, combined with financial pressures, are causing many landlords to reconsider their investments. Let’s take a closer look at the financial impact:

Financial Pressures Facing Landlords

From a financial standpoint, landlords are now dealing with several challenges that impact their profitability:

• Box 3 Tax Adjustments: Upcoming changes to investment property taxes in Box 3 will affect many property owners’ income calculations.
• High Transfer Taxes: The transfer tax on investment real estate is currently set at 10.4%, which will drop slightly to 8% in 2026 but it still remains a significant cost for investors.
• Higher Interest Rates: Loans for investment properties typically come with higher interest rates (currently around 5-6%) compared to residential mortgages.
• High Own Capital Requirement: Banks do not finance rental properties with a 100% loan-to-value ratio, meaning investors must have a significant amount of capital upfront.

These constraints are making real estate investments less attractive for smaller investors, who are now opting to sell rather than face diminishing returns. Consequently, many of these properties are re-entering the market, creating an opportunity for first-time buyers.

What Does This Mean for First-Time Buyers?

The properties now entering the market—often between 50 and 100 square meters and priced around €200,000 to €500,000—are a promising opportunity for first-time buyers. This shift means a broader selection of starter homes in many cities, with some properties staying longer on the market, even allowing room for negotiation—a rarity in the fast-paced Dutch housing market of recent years.

However, regional differences remain significant: in highly sought-after Randstad cities like Amsterdam and Utrecht, demand keeps competition high, often leading apartments to sell quickly above the asking price. In contrast, mid-sized cities and rural areas tend to offer more reasonably priced options, giving first-time buyers outside major urban centres a better chance at affordability and negotiation.

Investing in a Rental Property: Still Worth It?

Despite the increased regulation, property investment in the Netherlands remains appealing in the long term, with property values steadily rising over the years. The government has shown signs of understanding the importance of a balanced market and is already planning to reduce the transfer tax for investors from 10.4% to 8% as of 2026. This change reflects an effort to maintain incentives for investment in real estate, which plays a crucial role in housing supply.

In the meantime, if you are searching to purchase your first house in the Netherlands, the current market may be the perfect time to seize the opportunity.  Contact us today to explore the possibilities and take the next step in your home-buying journey!