Investing in affordable real estate
The Fund believes the best way to maximise its positive societal impact is to invest in more affordable mid-rental segment homes and to keep the current housing stock affordable. With this investment objective in mind, the Fund’s ambition is to have at least 60% of the total acquisition pipeline consist of homes in the affordable mid-rental segment category (€ 764 to € 1,060). In 2022, 58% of all acquisitions were in the affordable mid-rental segment.
In line with the Fund's strategy, the Government decided to cap rent increases in 2021 and 2022 at inflation plus 1%. In 2022, this amounted to an increase of 3.3% and the Fund applied this increase where possible.
Driven by current high inflation levels, the Fund started to focus more actively on the affordability of its homes. By taking additional measures, the Fund wants to reduce energy, service, and mobility costs where possible. This will reduce the cost of living for tenants, which could well result in a lower tenant turnover rate and higher tenant satisfaction.
The Fund is heavily involved in the ongoing national debate on increasing the supply of affordable homes. Together with the IVBN, the Fund has been in close contact with the Ministry of the Interior to provide input on the new rental regulation. At this point in time, the proposed measures are only in the event of tenant turnover and are expected to have a relatively minor impact on the Fund’s rental income. Given the average turnover rate, the Fund expects a reduction of 0.23% in the gross rent of the total portfolio in the first year. This represents a reduction of approximately € 610,000 of the total gross rental income. However, the definitive measures are still uncertain as parliament has yet to issue a decision on this front. The regulation is expected to take effect on 1 January 2024.
Focus on liberalised rental sector
The Fund sees the liberalised sector (rents of € 764 and above) as particularly interesting, as demand is set to increase, while supply is lagging, especially in the Holland Metropole region. With more than 90% of its properties in the liberalised segment, the Fund’s focus continues to be on this segment.
Allocation of investment property by type of rent based on rental contract
In the graph above, the Fund has added the mid-rental segment for liberalised properties subject to agreements with local governments, regarding for example rental levels and rent increases.
Around 64% of the current portfolio has a monthly rent under € 1,300. This means that the majority of homes are affordable for lower to upper middle-income households. This is primarily because the high proportion of energy-efficient homes ensures that energy costs for the Fund’s tenants are relatively low, compared to the national average. The homes in the higher segment are in locations where the demand for this type of home is substantial. The following five cities account for almost 90% of the rents above € 1,550: Amsterdam (65%), Diemen (6%), Rotterdam (6%), The Hague (6%), Utrecht (4%) and Amstelveen (4%).