Market information

At BPD, rental housing is just as important as owner-occupied housing. In Germany, France and the Netherlands rental housing is currently under development for the institutional and private investor markets. Demographic and economic trends are proving increasingly non-linear, which in turn impacts the rental market. The structure of and attitude toward the rental market varies greatly from country to country. BPD understands the best practices of the rental market and translates this into innovative and secure value investment products.

The Netherlands

Information relevant for investors. See following sub-sections: Market, Legal and Fiscal.

Rental market

There is a fast growing demand for houses with a rental rate between 710 euro and 1,000 euro per month. Especially the younger generation has a different perspective on housing and ownership than the generations before them. As a result, they opt to rent more often than to buy their first home. The Netherlands has a rather extraordinary rental market. The Dutch housing supply predominantly consists of privately owned homes and social housing. Dutch housing associations are the largest party in this social rental segment.

Growing demand

The decreased demand for houses on the buyer’s market has a proper impact on the rental sector. New legislature and regulations concerning the rental rate law that came into force in 2013 mean that rents in the social sector will approach liberal market rents. Further downscaling of subsidies for the purchase of houses and for the social rental sector, and the implementation of the rental levy for houses with a rental rate less than 680 euro p.m. will make the Dutch rental market even more interesting for investors.

Solid foundation

Indirect return on investment developed unfavourably over the past years, but there were no major fluctuations in the direct return over the past decade. Falling housing prices and rising rental rates saw direct returns grow from 3.6% in 2008 to 4.3% per year in 2012. A lot of foreign investors have a growing interest in the Dutch Market.


Dutch tenant law is pro-tenant. The tenant has a high degree of protection. The rent can be freely agreed between landlord and tenant for properties above the ‘liberalization rent limit’ of 710 euro per month. Properties below this limit are subject to rent control under the Residential Tenancies Act. Landlords of assets above the ‘liberalization rent limit’ may only increase the rent once a year; there are no specific rules about the amount or percentage of the increase.


With effect from 1 January 2014, a new landlord taxation is imposed on the rental of housing in the regulated sector. From this date the current landlord taxation 2013 will expire. The new landlord taxation pertains to the period 2014- 2017. Landlords of homes in the regulated sector must pay a levy of 0.381% on the value of these homes. This percentage shall be annually increased to 0.536% with effect from 2017. This equates to an average levy per home of 514 euro in 2014 and 776 euro in 2017.

Free sector

Houses in the non-regulated sector, so called free sector are excluded from the landlord taxation. These are houses with a monthly rent of more than 681.02 euro (2013 numbers). The landlord taxation is levied on both domestic and foreign taxpayers. The measure does not apply to landlords who rent out 10 homes or less in the regulated sector.


Information relevant for investors. See following sub-sections: Market, Legal and Fiscal.

Rental market

The current French residential property investment market is interesting. Investments in multiple-family homes are generally considered safe in an economic climate where investments such as bonds are under pressure. Investors assess that the market has a favourable risk-return profile related to fiscal legislation. The demand for ‘core investment products’ remains considerable. The French housing market has a sound foundation. There is a housing shortage, and the number of households will continue to grow substantially over the coming years. In turn, the housing shortage is expected to continue to increase.

Safe and interesting

Although it is relatively easy to finance the purchase of a residential property, French consumers are currently tentative with respect to buying their own homes. Similar to the situation in Germany, the French often rent houses for extended periods of time. The current labour market requires greater mobility, which is better suited to renting a property than to buying it. In the country’s major cities, the total number of households continues to increase. The greatest increase is found in the Parisian metropolis. There are substantial differences in rental rates between Île-de-France and the major regional cities. The private rental sector is a major component of the overall housing supply. France has a large, stable, professional but strictly regulated commercial rental market. The residential property investment market is predominantly concentrated in the major cities, although there are substantial regional differences.

Value development

Over the past years capital appreciation and value development figures were favourable. There were no major fluctuations in direct return in the past decade.


French tenant law is strongly pro-tenant. The tenant has a high degree of protection. The minimum period for an unfurnished tenancy is three years, or six years if the landlord is a property company. This does not imply that the tenant is obliged to stay in the property, or pay rent on it, for a minimum three year period, but that the landlord cannot grant a tenancy for a lesser period. Notwithstanding this general rule, the tenancy can be less than three years, subject to a minimum of one year, where the landlord needs to later recover the property for a very specific and certain purpose that is known at the time the tenancy is granted.


As from 1 September 2013, the capital gain is reduced by 6% allowance for each year of ownership of the property from the 6th year, with an allowance of 4% in the last year, providing a complete exemption after 22 years of ownership. Concerning social charges, a complete exemption applies after a 30-year period of ownership; the allowance is 1.65% for each year between 6 and 21 years, 1,60% for the 22nd year, and 9% between the 23rd and 30th year.


Information relevant for investors. See following sub-sections: Market, Legal and Fiscal.

Rental market

Germany has a strong rental tradition. Houses are often rented for long periods of time and consumers tend to purchase their first house relatively late in life. Second only to Switzerland, Germany has the largest share of private rent in Europe, with more than half of the German population living in a private rental home.

Good risk-return profile

Germany has a large, stable, professional commercial rental market. Investor activities are mostly concentrated around the country’s major cities, although there are large regional differences. Investors give a positive assessment of the risk-return profile of the residential property investment market, which serves as a safe harbour. There is also great demand for so-called ‘core investment products’. National and international investors are looking for houses in strong economic areas, in good locations. This increasing demand has caused prices to rise and the initial yields to fall.

Higher overall yields

The residential property investment market in Germany saw higher overall yields during the period 2007 through 2012 than the market for offices, stores or other commercial property. The direct return also rose sharply over the past five years. In 2007, the direct return was 3.4%, but this has since risen to 4.7% per year.

The increase of national German rental rates has lagged behind inflation. However, these figures also vary enormously according to region. Berlin and Hamburg show the greatest growth, although Cologne, Düsseldorf, Frankfurt and Stuttgart have also demonstrated strong rental rate developments. Munich remains the most expensive city in Germany by far.


German tenant law is pro-tenant. The tenant has a high degree of protection. The regular residential rental agreement can be terminated by the tenant at all times with giving notice of three months. For privately financed housing - in contrast to social welfare housing – the lessor may, during the term of the lease, increase the rent to a rate ‘customary for the area’. A rental rate customary for the area is the average amount paid for comparable apartments in the area where the tenant lives.


The Corporate Income Tax rate including solidarity surcharge amounts to 15.825% for corporations such as investor. If individuals own the Real Estate direct or indirect via a transparent partnership, income is subject to income tax. Income tax rate amounts up to 45%. Letting of residential real estate is exempt from VAT.