The response of outgoing minister Hugo de Jonge to the announced sale of thousands of rental properties by Heimstaden is bad news for the sector. De Jonge speaks of ‘good news’ for home seekers. Real estate agents are surprised on social media about De Jonge’s lack of knowledge.
The outgoing minister: ‘It means that the number of affordable homes for sale is increasing. He also sees the sales of Swedish investors as ‘a correction to the lopsided growth’ of recent years. By this he refers to the rise of large real estate investors who charge too high rents for homes.
‘The question is of course: what is Heimstaden for an investor? How did they get those homes?’, De Jonge said on Friday after the cabinet meeting. ‘If you look closely, you see that these are all affordable homes, which could also have been bought by people with a middle income, teachers for example, nurses, police officers. But they missed out because Heimstaden, or another international investor, beat them to it. And so in the past five years, 75,000 affordable homes have actually been bought up and then put back on the market as overpriced rental properties.’
‘An example of being crooked, talking straight’
Pararius chairman Jasper de Groot calls De Jonge’s response on LinkedIn ‘an example of crooked, straight talk’. De Groot: ‘Is it strange that I am surprised by the lack of knowledge? Such large residential portfolios are sold in blocks in a rented state to large investors and were never sold individually empty of tenants to a teacher or firefighter. These homes were originally built for the rental market and are now disappearing into the purchase market. This makes the rental market smaller, causing prices to rise.’
And: ‘De Jonge seems to think that people who cannot rent socially only want to buy. However, the demand for rental properties in the flexible private sector has never been as immense as it is now. If the supply decreases further, due to the accumulation of unbalanced government measures, only to the disadvantage of landlords, then you should not be surprised that the rental prices of the supply in the private sector that will soon remain, will skyrocket. ‘
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Sale of homes financial necessity for Heimstaden
The sale of Dutch homes is part of a larger sales plan by Heimstaden. The Swedish investor is hit hard by the increased interest rates and urgently needs money. That’s what the FD writes.
The thousands of rental properties that Heimstaden wants to sell are part of a much larger European plan. The company needs money due to increased interest rates and its high debts and may sell up to 25,000 houses in several countries, almost half of which in the Netherlands. Country manager Michiel Vrijman confirmed this in conversation with the FD.
That is at odds with the reporting so far. When announcing his Dutch sales plans on Thursday, Heimstaden cited the ‘political climate’ as the cause. The ‘hostile policy towards landlords’ due to a higher transfer tax and upcoming rent regulation was the main reason for designating 12,000 rental properties out of 13,500 for sale in the Netherlands. It is expected that 2,500 units will be sold in the next two years.
Also read: For sale: 6,900 rental properties, takeover preferably in one go
House prices in the Netherlands are currently holding up well and rental properties may yield higher returns than in Germany and Sweden. In the latter country, house prices have fallen by almost 15% since the peak and in Germany by 10%. Moreover, concerns about the residential real estate market in these two countries are greater.
Heimstaden chooses to sell rental houses one by one to private individuals. The company believes this will raise more money than if thousands of homes were sold in one fell swoop to another real estate investor.
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‘De Jonge’s response is bizarre’
Vrijman is also bothered by the minister’s response on LinkedIn: ‘We have often spoken with the ministry in the past two years, pointed out the facts, proposed solutions and warned about the consequences of the proposed housing policy. It is astonishing how the largest foreign institutional investor in Dutch housing is now being dismissed by outgoing Minister De Jonge on the basis of factual inaccuracies.’
I don’t know what the considerations are for Heimstaden (nor do you know). But De Jonge’s announced rules will be devastating. For investors, but certainly also for the rental stock. Count your losses.
— George Kloprogge (@George_SenH) October 8, 2023