The (im)possibilities in buyout protection
Date: April 12, 2022
Modified November 14, 2023
Written by: Thijs Cornel
Reading time: +/- 2 minutes
Date: April 12, 2022
Modified November 14, 2023
Written by: Thijs Cornel
Reading time: +/- 2 minutes
As of January 1, 2022, the "Housing Act 2014" (hereafter: Housing Act) has the instrument of buyout protection. Due to the historically large housing shortage, the availability and affordability of housing is under pressure in many areas. Eventually the problem must be solved by building new housing, but in the short term buyout protection should provide a solution. Buy-up protection should ensure that homes in sought-after areas cannot simply be bought up for rent. In this article, I discuss the possibilities and impossibilities in introducing buyout protection by municipalities.
The amendment to the Housing Act is intended to preserve low-cost and medium-cost housing (average of about €355,000) in the owner-occupied segment for buyers who want to live there themselves. Buy-up protection must be established in the municipal council's housing ordinance. The municipal council uses its powers only if it is necessary and appropriate to combat a scarcity of housing in the low-cost and medium-priced segment, or to preserve the livability of the housing environment.
When the city council determines that there is a scarcity of low-cost and medium-cost housing and measures are desirable, the council will have to substantiate, based on current insight, that there are unbalanced and unjust effects due to that scarcity. In addition, the city council will have to substantiate that implementing the measures will also be necessary and effective.
In addition to the effects that buying up homes for rent can have on the scarce owner-occupied housing stock, these buyouts can also cause an impairment of the livability of the neighborhood in question. In doing so, the city council must substantiate that the use of buyout protection is necessary, appropriate and proportionate.
The problems may vary from place to place, and even from neighborhood to neighborhood. Each area will therefore have to make its own assessment of the desirability of measures. It is therefore expected that not all municipalities will (immediately) use the possibility of establishing buyout protection.
Although the interpretation of the concept of "cheap and medium-priced home" may differ from one municipality to another, in practice, the NHG limit, which has been set at €355,000 for 2022, is usually adhered to. The municipal council can designate an area within which the buy-up restrictions will apply.
The Housing Act does not distinguish between different types of housing. Thus, buyout protection is possible for both new construction and existing construction, but other typologies are also conceivable. The buyout protection only applies to houses that are free of tenancy whose deed of transfer is registered in the public registers after the introduction of that protection.[1] It is therefore important to be keen on the effective date of the buyout protection. Houses that are acquired by name before the effective date, by registration of the deed of transfer in the public registers, are not covered by the buyback protection. However, houses that have already been purchased but not yet delivered may be subject to buy-back protection.
The buy-back restrictions in the housing ordinance shall take the form of a prohibition on renting out a dwelling, in the aforementioned area, category and segment. The municipal council may provide in the housing ordinance that an administrative fine may be imposed for the violation of the prohibition.
It is clear from the law that the City Council is required to grant a permit in a number of cases. A permit is granted in any case in the case of:
Additionally, municipalities can designate their own exceptions appropriate to the issues and composition of the neighborhood in which buyout protection is introduced. Several municipalities, such as 's-Hertogenbosch and The Hague, for example, choose to include such exceptions with respect to housing corporations and healthcare institutions, for example.
In addition, in the housing ordinance, the city council may give the authority to the mayor and aldermen to grant exemption from the prohibition on renting in concrete and individual cases. Sometimes it may be unreasonable to refuse to rent out a home. Consider the situation where the homeowner dies and the heirs cannot reasonably be required to occupy the home themselves. An exemption may be subject to regulations and restrictions.
As of Jan. 1, 2022, municipalities have the option of using buyout protection. Especially in large cities, regulations on this are forthcoming. The implementation of the rules on buyout protection still raises some questions. We have listed a number of points for you to consider prior to the purchase of a property:
[1] And for dwellings, which on the date of entry of the deed in the records, were in rented condition for less than 6 months.
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