Chapter 4
Policy: Rules of the Game

By the Books: Legalities in Student Housing – The Netherlands Case Study

Over recent years, students and young adults across Europe have become increasingly mobile, studying abroad and expanding horizons. To enable this group to discover Europe, qualitative and affordable student housing is key, which, for the parties developing and providing student housing, is often a challenge to achieve. Part of this challenge is the legal and tax rules that have to be navigated and complied with that tend to get increasingly more rigid. In the Netherlands, there are no specific rules or benefits for the asset class ‘student housing’, everything is regulated by the ‘general’ - somewhat inflexible – rules that are applicable.  

The student housing market in the Netherlands is one that knows a shortage in accommodations, small rooms for high prices and one of private landlords. This of course provides opportunities for (institutional) investors and other parties that wish to accommodate students from the Netherlands and from abroad. However, the student housing market is also one that comes with its (legal and tax) challenges that are also relative to many countries across Europe.  

Student housing in the Dutch market is governed by residential lease law and spatial planning and zoning rules which are, for the most part, mandatory and tenant friendly. For instance, with respect to protection of the tenant against termination of the lease, the rights of the tenant’s partner, the notice period, the rent and rent review. The use of existing real estate for student housing purposes is also often regulated – and limited – by zoning plans. For development projects, in addition to the spatial planning rules, the general rules for construction of (residential) buildings apply. The tax position of the investor also plays an important role in the overall returns.

Students seek more affordable housing solutions in the Netherlands, an undersupplied market. (Source: Unsplash)

Affordability vs. rent control interacting with the (non-)flexibility of contracts for living typologies

The residential market can be divided into two sectors: regulated and non-regulated. The distinction is determined by the rent level (subject to certain caps) set by government on the basis of a system that awards points for facilities. As of 2020, all units that can be rented above EUR 737,14 per month qualify as non-regulated units.

For student housing you often see so-called “short stay” concepts for which no rent protection applies. “Short stay” as such is not defined under Dutch lease law, but most often defined as leasing (out) a self-contained property for a minimum of one week up to a maximum of six to twelve months. Generally, the lease is then subject to VAT, which will translate into the price.

Many municipalities regulate short stay through Housing Regulations in the wake of activities of platforms such as Airbnb, which have created some negative effects such as disturbance of the housing market.

The graph above shows rental for a single person household per income, 2015-2018. (Source: Scheidingswijze)

Land use and zoning

The question whether properties are allowed to be developed and/or used for residential purposes will primarily be governed by the applicable zoning plan. Especially in urban areas, these will often include rules on residential use. In some cases, the use of a unit is limited to ‘a single household’ and therefore cannot be leased out to, for example, groups of students. In addition, zoning plans often stipulate limitations (or even ban) the use of residences for short stay purposes. Also, a zoning plan might include regulations on rent levels. For existing residential property, this is a challenge. For student housing that still has to be developed, a deviation from the zoning plan can be requested with the application for an environmental permit for the development.

Map displaying the Zoning Plan Amsterdam City Centre. (Source:

Tax considerations

Significant tax changes have occurred for Dutch real estate investors over the past years and some are coming up. Until 2020, buying residential property was subject to only 2% real estate transfer tax. This is scheduled to change to 8% in 2021. Investors and developers also need to consider (partial) non-deductibility of interest expenses when financing their investments. For better investment returns, more and more investors engage in development projects. The flipside for them is that student accommodation leases are generally being exempt from VAT, so the VAT due on development costs leads to an 21% VAT additional burden. A ‘landlord levy’ is due by the owners when leasing the property below EUR 737,14 per month. For corporate investors, income (including capital gains) from real estate is subject to 25% corporate income tax, where the rate for the first EUR 245,000 will go down to 15% as of 2021 (EUR 395,000 as of 2022) to compensate in part for the broadening of the tax base.

Due to rising prices of housing, in the Netherlands and across Europe, the debate for affordable housing – including student accommodation – is ongoing and getting stronger. Governments are investigating new ways to regulate the rents and the allocation of affordable housing. We do expect more and more rules that will limit the freedom of (institutional) investors to successfully develop and let student housing accommodation. It is therefore of essence to timely engage the right advisors that can help navigate the (legal) world and advise on mitigating measures that can result in feasible and successful projects.

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