Rental Contract Liberalisation in The Netherlands: Effects on Rents, Vacancy Rates and Residential Mobility

On 1 July 2016, the Wet doorstroming huurmarkt (Rental Market Transition Act) was implemented in the Netherlands. This law made it possible to temporarily rent out a property for a maximum of two years. The law was created to promote flexibility in the rental market. In particular, better allocation of households was the goal. This paper empirically analyses the impact of temporary contracts by considering the frequency of short stays (up to 2 years). We investigate the changes in this frequency since 2016. We also consider possible implications of the introduction of temporary contracts for rents, residential mobility, and duration of vacancy. We quantify the benefits of short stays to landlords, which mirror the cost of tenants, in terms of higher rental revenues. We also find that residential mobility in the private rental market increased significantly after temporary contracts were allowed, not only in the first 24 months of stay, but overall, as intended by the law.