This is evident from the calculations of the experts BNR spoke to. The high rates are the result of temporary adjustments to the tax system made by the government after the Supreme Court declared the existing wealth tax illegal.
That ruling costs the government billions of euros in compensation. The temporary measures were supposed to ensure that the money was brought legally again quickly, but are now leading to extreme and unfair situations, says Jeppe de Boer, managing partner of Annexum, a fund that offers small investors the opportunity to invest in the sector real estate.
“We know countless examples of dentists, accountants, construction workers and artists who depend on income from a home or investment fund for their retirement,” says De Boer. According to him, skyrocketing rates have “a disproportionately large impact on their income position.”
“The lever becomes a millstone”
The abolition of spot metering, in particular, has a major impact. While debts could largely be deducted from assets until 2022, fictitious interest costs are being used this year. Shoot the other True rising interest rates. This is unfavorable for investors using debt capital. “And in real estate, they’re almost everyone,” says De Boer. Since the Tax and Customs Administration also expects a yield of more than 6% on real estate this year, the effective tax on real estate income could rise to 90% or more, about three times more than last year.
“Politicians here clearly have a blind spot for private sector interests,” says De Boer. This group is well represented on the rental market with half a million homes, according to data from Statistics Netherlands. Of these landlords, 80% have only one house for rent.
PwC partner and real estate specialist Serge de Lange also sees the tax burden on real estate rising, partly due to the high tax price of borrowed money. “The lever has become a millstone,” says De Lange. “Property suddenly isn’t a good investment anymore.”
The rental market is emptying, rents are rising
Due to these tax developments, Annexum no longer invests money in the real estate market. In recent years, the fund has invested in approximately 800 new homes and offices that have been converted into homes.
Rental platform Pararius says Annexum is part of a larger exodus from the property market. The consequences of this are particularly evident in large cities, says Jasper de Groot, founder of Pararius. “We’re already hearing reports of brokers retraining to become selling brokers because investors ask them to expand their portfolios.” Data from the rental platform shows that the number of homes entering the rental market in Amsterdam has halved in the past two years. As a result, rental prices have reached record levels: over 25 euros per square metre.
The low wealth tax in the Netherlands has been under criticism for years, but according to De Groot, middle earners are now the victims of policies aimed precisely at tackling inequality. ‘Poor investor, who’s to say?’ says de Groot. “But the wealth tax hike and plans for far-reaching regulation of the free sector will lead to even more rigidity in the rental market and thus even higher rents in the free sector.”
According to de Groot, even middle-income earners do not find a safe haven in the landlord-occupied market: “With an average income you still don’t earn enough to buy the average Dutch house,” says de Groot. Its price is now just above four tons. “Not even if purchase prices fall by 10 percent.” De Groot thinks that a large group is becoming increasingly difficult and fears “disruptive situations in society”.
Expensive properties could be the ‘new normal’
Many experts believe that the new tax system, like the old one, will be challenged up to the Supreme Court. For example, on Friday the Telegraaf headlined that a new court battle was imminent over Box 3. PwC’s De Lange thinks the legal battle will be “very exciting”. He himself sees the most in a rebuttal scheme, where a fictitious return is the starting point of the tax assessment, unless someone can prove that such restitution has not been achieved. In effect, the notional rate then becomes an upper bound. “But perhaps the current fiscal climate is just the new normal. This is a real wait and see.’
In response to the criticisms, the responsible state secretary Martin van Rij (CDA) has already announced in a letter to parliament that the fictitious tariffs could be adjusted again. For real estate, there would then be separate rates for rented and unlet, residential and other real estate. De Boer, on the other hand, speaks of ‘an exercise with the fingers’. “There is no concrete proposal yet, but we hope it goes down. That would mean they have listened carefully to the market.’