Living in Amsterdam

• 13 August 2023

Renting in Amsterdam is currently more expensive than ever, and it is extremely difficult for someone with a somewhat limited budget to still get a flat, student room, studio or even house. Logically, this has everything to do with the increased house prices in Amsterdam in recent years. But what in turn are the causes of this? And how do we notice that renting in Amsterdam has become more expensive?

Causes increased cost of renting in Amsterdam

Fundamentally, the causes of rising rents in Amsterdam are fairly obvious. There is a combination of factors. Thereby, there are two causal factors that appeared and appear to have the biggest effect. These are:

• Housing shortage:First of all, there is a housing shortage in and around Amsterdam. The city is simply hugely popular. With students, but also certainly with working people. As a true metropolis, Amsterdam enjoys great appeal. Just recently, the municipality itself indicated that by 2030 there will be as many as between 10,000 and 15,000 homes short of demand if they continue at the same pace. When supply is so below demand, one effect is soon the immediate result; a rise in prices. For instance, house prices rise in Amsterdam itself, as investors know it is a relatively smart investment. At the same time, this also means that rents skyrocket.

• Rising energy prices: At the same time in 2022, energy prices soared, largely due to the war in Ukraine. Sanctions back and forth between the West and Russia did not go unpunished on either side, and there is currently a huge shortage of gas as a result. It also leads to massive inflation, including in terms of electricity prices. Then, when you want to rent in Amsterdam, you also have to deal with this. This second cause is therefore mainly related to utility costs. These are the biggest costs you incur besides the bare rent itself.

So it is pretty clear where the increased rents in Amsterdam are roughly coming from. But while we are on the subject of rising rents; exactly what increase is there?

How much more expensive has a rental property in Amsterdam become?

So when we look at higher rental costs in Amsterdam, there are two things to focus on; the bare rent itself and the cost of utilities. Let's look at these step by step.

• Rise in bare rent: In 2019, for an average 2-bedroom rental property in Amsterdam, you came out at a bare rent of around €1500 per month. By the end of 2022, this amount had already risen to around €1750-€1800 per month. A very significant increase, which not everyone can easily cough up.

• Increase in utility costs: The cost of utilities in particular has also seen a sharp rise in prices in just one year. Where in August 2021 you were still paying €0.95 per m3 of gas and €0.24 per kWh of electricity, this rose to €3.77 per m3 of gas and €0.95 per kWh of electricity, respectively. So in terms of utilities, you end up with about 4x the original cost. Whereas this used to cost around €100-€150, it now theoretically amounts to €400-€550.

It should be mentioned that the government came up with new rules, putting a ceiling on the rise in average energy costs. Do you have a smart meter in your meter box? Then you only have to pay around €256 per month on g/w/l. With an old meter box, your advance payment amount is likely to be a lot higher (up to €550), but it is possible to get money back afterwards.

How renting in Amsterdam may become cheaper in the future

From 2024, the Dutch government will come up with new rules for the rental sector. As a result, there is a possible bright spot regarding rents in Amsterdam.

Thanks to a new scoring system, investors are going to experience lower returns on property investments. Potentially, this will reduce demand for housing in Amsterdam, with the same effect on prices. Good news, then, for the original, private Dutchman.

However, it is also possible that especially the new 'expat' Dutchman will benefit. If the big companies in the Netherlands decide to house them here, the price drop may remain (very) limited.

The future will tell!