An investment property with a room rental permit can be very lucrative. But this can sometimes entail hidden risks for the owner. Are you sufficiently aware of the regulations on room rental? Or will you be shocked by a lower valuation than expected? FRIS regularly values investment homes with room rental permits. So avoid surprises and learn more about regulations in the municipality of Amsterdam, in this article.
The importance of a conversion permit
With this form of rental you should first take into account municipal policy. If a house is shared by more than two adults, a conversion permit is required in the municipality of Amsterdam. This permit can be applied for via the Amsterdam municipal website. The most important conditions are:
- The layout of the dwelling must be submitted;
- There must be a communal area of at least 11 m2;
- The dwelling must comply with the fire safety requirements;
- It must be arguable that the conversion does not have a negative effect on quality of life;
- A situational plan must be provided, showing how the dwelling is situated in relation to its immediate surroundings;Possible additional sound insulation
Sometimes landlords try to circumvent a conversion permit with creative forms of subletting. But please note that for checks by the municipality of Amsterdam, the actual living situation will apply, not the situation as set out in a rental contract! Moreover, as the owner you are always responsible, even if subletting takes place without your permission. It is therefore essential to regularly inspect your investment property for (illegal) subletting.
The property valuation system
In the case of room rentals with a permit, the regulations of the Housing Valuation System (WWS) are also important. This score determines the quality of the rental property and therefore the maximum rental price. As an investor, it pays to be familiar with the housing valuation system. Are you letting a self-contained dwelling? If so, it is advantageous to ensure that the accommodation falls in the non-regulated or ‘free’ sector. This means that, as a landlord, you do not suffer any restrictions as to the amount of rent you can charge.
However, in the case of non-self-contained accommodation, there is no distinction between the social, regulated and free sectors. The owner is thus always restricted to the maximum rent chargeable according to the housing valuation system, when renting out rooms. And the Rent Commission does not attribute any value to the location of the room in the scoring of non-self-contained accommodation. Which is why these maximum rental amounts usually deviate considerably from the open market rentals.
A common mistake
Our valuers often find that the owner of an investment property does have a conversion permit, but fails to take the regulations of the Rent Commission into account. This affects the valuation of the property. For example, the owner asks for a rent of € 600 per room, while valuers have to apply a maximum rental price of € 400 according to the property valuation system. In this example, let’s assume an apartment with 3 bedrooms, which can be rented out to a family as a self-contained home for € 1,600 per month. The sum of the maximum rental prices of all rooms (3x € 400) in the example would be lower than the market rent of the apartment as a self-contained dwelling. Since an owner always has to adhere to the maximum rental price in accordance with the housing valuation system, the contract rent is not included in the valuation assignment. In the above example, room rentals therefore have a negative impact on the value of the property.
The solution: rent out self-contained accommodation
Solve this problem by renting out the property as a self-contained dwelling to a group of residents, instead of drawing up individual room contracts. After all, if the home as a whole (self-contained accommodation) can be let in the free sector, the housing valuation system does not apply. There are, of course, conditions that do also apply to the letting of a dwelling as self-contained accommodation (see Article 3.1.1, paragraph 1 HvvA 2020). It is also important to include a number of special provisions in the rental contract, so that the contract cannot be regarded as disguised employment. We therefore recommend that such a contract be drawn up in consultation with a specialist.
Amsterdam regulations as of 1 January 2020 and 1 April 2020
The rules regarding room rental have recently been tightened – in the Amsterdam Housing Ordinance of 2020. As a result, the above-mentioned rental contract to a group of occupants is no longer permitted in all cases.
What are the rules?
From 1 January 2020
- Further tightening of the requirements regarding the layout of the rooms;
- Fire safety requirements;
- Additional noise requirements for 4 rooms in accordance with NEN 5077 (from 1 July 2022). The leniency allowed in the 2019 regulation for sound insulation for 4 rooms will be extended;
- For 5 rooms or more, additional noise requirements in accordance with NEN 5077 and notification of fire safety via the Environment Desk;
- In some cases it will be necessary to apply for an environmental permit.
From 1 April 2020
The rules applicable from 1 January 2020 will remain in force, and will be supplemented by the following:
- A maximum of 1 adult may live in each room. Or 2 adults per room in the case of a marriage or registered partnership;
- Each tenant must have their own rental contract;
- In the case of 7 rooms or more, the municipality will only issue a permit if the residence is suitable for that purpose. The owner must also demonstrate that the room rental will not affect the quality of life in the area. For less than 7 rooms, the municipality can also ask for such a declaration (see 3.3.13 paragraph 2,c);
- A district and building quota applies.
As the owner of a rental property in Amsterdam, do you have a conversion permit? In that case, make sure that your rental contract has been drawn up correctly – namely in the form of a group contract with the necessary special provisions. In such a case, the rent will usually be higher than in the case of a traditional rental to a family. This will also prevent unpleasant surprises. As letting on the basis of room contracts raises the chance that your valuation will be lower than you expect!