Private landlords are taking the Dutch government to court to challenge a cap that limits how much rent they can charge in areas with the highest property prices.

Landlords’ organisation Stichting Fair Huur claims that the WOZ-cap, a regulation that restricts the impact of the value of a house on its rental value, is a breach of their human rights.

The cap was brought after the official estimate of a property’s value known as the WOZ, used by local authorities to calculate tax rates, was included in the points system that regulates social and mid-sector rentals.

Houses that exceed a certain number of points are exempt from rent controls, leaving landlords free to charge whatever they want. But in 2022 the WOZ-cap was introduced after rising property prices pushed thousands of homes in upmarket areas out of the social rent bracket, increasing inequality.

The rule says that the value of the property cannot account for more than one-third of its total points value. Points are also awarded for factors such as the size of a property, the number of rooms, energy efficiency and the quality of fittings.

Compensation claim

Stichting Fair Huur said the cap had forced some landlords to cut rents by as much as 50%, which they say violates the European Convention on Human Rights by restricting an individual’s right to peaceful enjoyment of their property.

If the organisation wins its case at the district court in The Hague, it could trigger compensation payments running into the tens of millions of euros.

A similar argument was used to overturn the government’s use of notional interest rates in setting income tax on assets in the so-called Box 3 judgment, which is costing the treasury an estimated €4 billion in lost revenue.

The tenants’ association Woonbond is also a party to the case, along with the government. It argues that removing the cap would lead to rent inflation in cities such as Amsterdam and Utrecht, with prices no longer reflecting the quality of the accommodation.

“Contrary to what Fair Huur claims, the WOZ-cap is clearly in the public interest,” the organisation said in its submission to the court.