€ 100 rent increase per month in times of declining purchasing power

LONG READ – How the ‘crooked tenant’ is increasingly in the dark corner. This year, resulting in an extreme version of the income-related rent increase. And that in a time of dwindling purchasing power. A way out entices only a few. The income-related rent increase should still be off the table. As well as the regular rent increase. A guest contribution by Jan Kok.

Kees is a national pensioner, has a reasonable pension; his wife Mila works and earns the minimum wage. In 2020, he also had an annuity payment because he had always dutifully participated in the wage savings scheme. Joint household income for Kees and Mila: € 56,000, ie. gross. So a middle income.

They live in a regulated rental property from a private landlord. One hundred years old, energy label G, single glass, central heating main fireplace wobbles and always hassle with maintenance. They pay € 705.66 rent for this; in addition to the service costs. Definitely not a cat pee.

They recently received a rent increase letter from their landlord: 50 € rent increase! The landlord had calculated the rent increase percentage to two decimal places: 7.09%. Whether they will pay 755.66 € basic rent from 1 July 2022.

A neighbor who also lives in a regulated rental home with a private landlord, who has neglected maintenance for years, turns out to have received a rent increase of € 100 of his choice. Her rent would increase by about 20%!

Such voices can also be heard from circles of tenants of public housing (regulated rental housing from housing associations).

Why these huge rent increases? Because they belong to the ‘crooked residents’ who are detested by the government and on whom income-related rent increases have been unleashed.

The ideology of ‘crooked life’

Let’s start at the beginning: ‘suitable housing’. Almost always with a focus on ‘suitable rent’. Rent in such a way that the characteristics of the household match well with the characteristics of the rental property.

On the one hand, there is ‘physically suitable rental’: the size of the household corresponds well to the size / number of rooms in the rented house. But usually one speaks of ‘economically appropriate rent’: the household’s income then matches the rent level of the dwelling. One means to help achieve this is to “assign appropriately”.

The counter-form of ‘suitable housing’ is ‘skewed housing’ and of ‘suitable rental’ ‘skewed rental’. And then it’s usually about ‘cardigan bearings’: the income is too high in relation to the rent.

‘Relevant housing’ and ‘skewed housing’ never refer to the owner-occupied housing sector. Do you want to live alone in a villa or live in a repaid owner-occupied house? The term ‘skewed purchase’ does not appear in the dictionary. Of course not, it’s the free market. In times of increasing housing shortage, ‘appropriate letting’ has become an ideal goal that can be enforced from a political point of view.

It can also be said that almost all tenants live crookedly in one way or another. After all, they pay high rents for long-depreciated homes. The so-called problem of renting too cheaply was spurred on by politicians when the regulated rental sector in 2012 was reserved for the lowest income households. If you had a middle income, you could no longer enter the regulated rental sector. And with the skewed consequence: If you have a middle income, then you need to leave the regulated rental sector! To provide space for those for whom the regulated rental sector within this limited vision of social housing would be intended.

Business income policy through rent

But how do you get seated tenants with fixed leases out of their home? The economic stick was seized: extra rent increases, income-related rent increases.

Very strange indeed. Business income policy through rent. The extra money does not go to the state, but falls into the hands of landlords who do not have to offer anything in return. It also increases the difference between tenants and buyers. When buyers earn more, they can borrow more and get more out of the mortgage interest deduction.

Is this legally correct? Can one just impose on certain categories of tenants all kinds of new rent increase rules that tenants and landlords were not aware of when the tenancy was entered into?

The following years will also show that the tenant is a cash cow. When in 2013 will the landlords of regulated rental housing (housing associations and private landlords) receive the landlord tax. Months rent disappears into the treasury. And the ‘ball bearings’ contribute extra to that. It is actually a tax for tenants in a regulated rental property. An additional tax for households at the bottom of the income pyramid.

10-year income-related rent increase

The income-related rent increase is celebrating its painful second anniversary this year. The Route II cabinet (thank you PvdA) introduced in 2013 the income-related rent increase. Intends to smoke the ‘cheef tenants’ out of their homes against the free sector rent and purchase. So that many regulated rental housing would thus become available to households with a lower income. So it becomes less necessary with new construction of social rental housing. And so social housing could be sold and liberalized to please buyers and expand the so-called middle segment.

But these free rental homes and owner-occupied homes were practically inaccessible and affordable for the ‘ball bearings’, which got worse over the years. And when regulated rental properties from private landlords became available, they still passed the nose of the lower incomes. Most of them already had a number of points above the liberalization limit (also known as the social rent limit) so that they could be ‘released’ until the rent often exceeds € 1,000. Apparently, none of this was a reason to abandon the income-related rent increase. The housing associations have never really opposed this extra source of income.

For the first four years, two income categories were used: those who earned ‘a little too much’ and those who earned ‘a lot too much’. Well within tenancy then. We are not talking about the real high-paid here: They do not rent, they live in owner-occupied housing. Both income categories received a supplement on top of the general percentage increase in rent of 0.5 and 2.5 percentage points, respectively.

Two major changes took place in 2017. The two income categories were merged into one and the supplement was at 1.5 percentage points. In addition, AOW pensioners and households of four persons or more were excluded from the scheme. For retired tenants can not buy a house at all, and large households already have enough expenses.

The extreme version of the income-related rent increase

The 2017 version of the income-related rent increase for residents in regulated rental housing continued until 2021. It was the year in which a general rent freeze was announced in connection with the corona pandemic and its expected purchasing power effects. In the meantime, however, the Rutte III cabinet had devised a new plan to address the ‘cheek tenants’ that the Rutte IV cabinet has taken over.

No longer a supplement to the ordinary percentage rent increase, but absolute amounts are being worked on to obtain a market-based rent for the ‘cheaper tenant’ as soon as possible. After all, meeting market conditions is the goal of neoliberal politicians.

In practice, this meant aiming for a rent corresponding to the maximum rent for regulated rental properties according to the points system.

There were again two income categories (based on household income in 2020), but now both divided into household type: single or multi-household household. The ‘somewhat cheap crooked tenant’ gets € 50 at once; the ‘very cheap crooked tenant’ € 100.

Big steps, fast home, the closet must have thought. And remarkably, there is no longer an exceptional position for retirees and large households. Were the arguments for their exclusion suddenly no longer valid?

(continued – tomorrow part 2)

Jan Kok is the author of the textbook ‘Werken aan wonen’ (Work with living) together with Siep van der Werf and director of the Amsterdam Tenants’ Association

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