Thinking of buying property in Amsterdam and renting it out? Reconsider!

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Dienst Wonen Amsterdam uncontrollable; reconsider your real estate investment strategy.

The housing situation in the Netherlands has its peculiarities. Low income (and sometimes even moderate to high income) depends on renting houses from the so called Woningbouwvereniging. This is a semi governmental organization dividing accommodation to lower income people.

This applies also for Amsterdam. It has long waiting lists, because there is not enough accommodation to provide housing to this group, and people stay put in a locked pricing model even if they climb the social ladder and should be moving on.

Unfortunately there are people that make misuse of this and illegally rent their subsidized houses to others, making a bundle of money on the difference. Also brokers offer these dwellings and earn a commission on the transaction.

Therefore the city council of Amsterdam decided to pass a law which enforces rental brokers to apply for a permit. This law was passed in June of 2007.

The intention was to crack down on illegal rental brokerage.

Enforcing this law was given to Dienst Wonen, a department within the civil servant organisation of the city of Amsterdam.

For all intend and purpose they probably started off with success. Only after some time this department lost complete track of the letter of the law and started to impose this rule on well established expat rental brokers and even on private persons who offered their dwellings to the expat community, either through other’s internet site or their own. Keep in mind that the expat community by the nature of their limited stay, will never be able to apply for subsidized housing. Too high income and too short time. And even if they do comply, by the time their number comes up, they are probably already back home or on their way home. Meanwhile are they supposed to sleep under a bridge?

This was not done in the way known by the Dutch as the Polder Model, but the full fist of the law was laid down on innocent people. The traditional model -innocent until proven guilty-, was thrown overboard.

If you think you can post a message on the pin board of the grocery store, you’re wrong. You will be hunted down and confronted with hefty penalties. They may even prosecute the store owner, on the assumption that he is illegally brokering. Sounds crazy? Well it isn’t.

The style and the manner of this megalomaniac and power crazed department is unheard of.

It works as a police institution and does not add any value to the housing market. Hours and hours of civil servants time (and our tax money) is spent surfing the internet for people offering rentals. The whole atmosphere within this organisation resembles the story depicted in the German movie “Das Leben der Andern”.

If they would limit themselves to the abovementioned illegal brokerages, then that stands to reason, but these people think they have card-blanche to grill any person.

So should you consider investing in housing in Amsterdam, think twice. The political climate of some parts of the Amsterdam city council organization is such that they want to determine what is going to happen to your money. Sound considerations like return on investment and long term strategies, are a great risk in such a climate.

What is also at jeopardy is the availability non-subsidized furnished accommodation for the expat community. Amsterdam is suffering from decreasing foreign investment and not being able to house your temporary brain workers is not going to help here.

So in a nutshell, if thinking of investing in real estate in the Netherlands fine, but eliminate Amsterdam of your investment list, until the political situation changes or people are corrected by their peers and made to realize for whom they work and by whom they are being paid.

And for those that own properties already, you might want to consider putting it on the market, now that prices are still stable. Not that the target group Dienst Wonen claims to protect can afford this real estate, but nonetheless. This way they can boil in their own misguided fat and hurting the economics of Topstad Amsterdam.

Tip: use these funds to buy short term rental real estate in Florida e.g. in the Orlando region. Enough people to visit the theme parks around Orlando (Disney World, Magic Kingdom, MGM Studios, Seaworld, Bush Gardens, etc.) Dollar is cheap, housing prices low, and the political and social climate favours investment opportunities and entrepreneurship.

If you put it on a saving account in the Netherlands, you want to have a interest rate of at least 4% (very unlikely currently), for the Dutch tax authorities will charge you 30% tax on 4% return on capital (Box III).

This underlines the wrongness of council politics wanting to limit your return on investment. And you thought the Berlin wall had disappeared?

Good luck with any decision you make,

Kind regards