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Performance on affordability

Investing in affordable real estate

The Fund is heavily involved in the ongoing national debate on affordable housing and has looked at what can be done with the current housing stock. One of the measures taken to keep the current housing stock affordable was to moderate the Fund’s annual rent increase. After limiting the rent increases by the Fund to inflation plus 0.5% in 2019 and inflation plus 1.0% in 2020, the Government decided to cap rent increases in 2021 and the following two years at inflation plus 1%. This is in line with the strategy of the Fund on this matter.

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 (€ 753 to € 1,013). In 2021, 58% of all acquisitions was in the affordable mid-rental segment.

Also in 2021, the Fund reached both standard and tailor-made rent deferral arrangements, in some cases related to Covid-19, with a small group of tenants across its portfolio. This had virtually no impact on the rental income.  

The Fund devoted a lot of attention to staying in close contact with the local authorities to increase reciprocal understanding between local authorities and institutional investors. In 2021, the Fund rounded off a position paper including thoughts on the residential market and providing possible solutions in terms of how the Fund could contribute to solving the problem. The Fund hopes this approach will help to avoid further regulatory measures from local governments and the Dutch national government, which could severely weaken the residential investment climate. Only when local authorities, housing corporations, institutional investors and project developers are prepared to join forces, will the Fund be able to develop a structural solution to the serious shortage of mid-rental segment properties in urban areas. Any excessive regulation is likely to hamper institutional investments and slow down the construction of much-needed new homes.

The Fund also noted that an increasing number of investors are taking this issue of affordability seriously and are looking to invest in ‘impactful’ residential projects. Given that the biggest challenge is to increase the supply of affordable homes, the Fund believes the best way to maximise its positive societal impact is to invest in more affordable mid-rental segment homes. This is why the Fund now focuses even more explicitly on affordable mid-rental segment homes when considering or making acquisitions.

Focus on liberalised rental sector

The Fund sees the liberalised sector (rents of € 753 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 mid-rental segment for liberalised properties was added with special agreements related to the likes of the rental level and rent increases.

The following five cities account for almost 90% of the rents above € 1,500: Amsterdam (64%), Rotterdam (7%), Utrecht (7%), Diemen (6%) and The Hague (5%). 

Price level

Around 62% of the current portfolio has a monthly rent under € 1,250. Despite the Covid-19 crisis, house prices continued to rise in 2021 and individuals, couples and families who no longer qualify for government-regulated rental housing are still finding it difficult to buy homes due to high house prices and a growing lack of affordable supply, especially in the Holland Metropole region. In addition to this, the rental market gives tenants greater flexibility. The Fund’s sharpened focus on affordable housing in the mid-rental segment has given it a solid portfolio of prime properties perfect for this target group.

Allocation of investment property by price level based on rental income