Larger cities to ban foreign real estate purchasing

There have been many initiatives recently to address the real estate shortage and high house prices in the Netherlands. The most recent initiative, by some of the largest cities in the country, is good news for home buyers but bad news for foreign investors: a full ban on foreign investment in the residential real estate sector. 

Rotterdam, Haarlem, Eindhoven and The Hague are the first of several cities in the Netherlands aiming to ban foreign real estate investors from purchasing real estate for the purpose of renting it out. This is an attempt to curb the housing market crisis that is currently happening in the Netherlands. Municipalities hope this ban will alleviate the high housing prices and housing shortage in certain neighbourhoods. Several other major cities in the Netherlands hope to introduce a similar ban. However, the Dutch Senate (Eerste Kamer) still has to approve the initiative, which will be on the agenda later this year.

Not surprisingly, investors and lending institutions are disapproving of this move since, as they argue, this does not address the actual reasons behind the shortage of housing and could actually push rental prices up. It’s true this solution does not create more housing, but it’s doubtful that rents would be pushed up, since there are mechanisms and organizations in place to keep rental prices from spiraling out of control. It is hoped that the move will allow home buyers more options, especially in these cities.

According to the new law, each city can designate which neighbourhoods are off-limits to foreign investors for purchase-to-rent. The first cities – Rotterdam, Haarlem, Eindhoven and The Hague – will have bans in place by 1 January 2022, if the law is passed by the Eerste Kamer. This is expected to happen without problems. The cities of Leeuwarden, Groningen and Zaanstad are also expected to introduce such a ban. Utrecht and Amsterdam are also interested, but it’s uncertain when they will make a move.

This new ban is another step the Netherlands is taking to curb the current housing crisis. Many cities have already banned renting entire apartments as vacation accommodation on sites such as, and other vacation rental websites. With the current vacation rental home ban, in cities like Amsterdam, The Hague and even in smaller municipalities like Noordwijk on the coast, owners need a special permit from the municipality to rent out their apartment to vacationers. Getting caught without this permit leads to a fine of several thousand euros. Additionally, Rotterdam has already limited the ‘reconfiguring’ of houses and buildings for the purpose of renting out smaller units within the same building, for example to students.

It’s not certain how municipalities plan to deal with foreign investors who already own apartments, but come January 2022 new investors will be turned away. In recent years private foreign real estate investing has been on the rise, particularly in the larger cities. Foreign real estate investments accounted for 8.4% of real estate ownership in October 2020 – up from 7.6% in October of 2017, according to the national land registry, Kadaster). According to Kadaster, foreign investors bought up 40% of the available owner-occupied housing in the major cities in Randstad over the past ten years, contributing greatly to the decrease in first-time buyers in these cities. 

What this ban means for foreigners living in the Netherlands is not yet clear. For example, if an American expat would like to purchase a second domicile as an investment property, will they be exempt from this new ban since they are legal residents of the Netherlands? Details like this, as well as the economic impact of turning away foreign investment, are as yet uncertain. But the uncertainties seem to outweigh the benefits the larger cities see by reining in some of what has been happening in the Dutch real estate market in recent years. And from the perspective of a ‘real estate layman’ it seems like a good move to nudge out foreign investors and make more room for local buyers and investors – especially since I hope to purchase a home in the next year or two!

Written by Marla Thomson