One of the Netherlands’ biggest residential landlords, Vesteda, may have to sell some of its 28,000 homes as investors withdraw en masse from one of its major property funds.
Vesteda disclosed in a press release at the beginning of March that nearly all investors in the Vesteda Residential Fund had requested partial or full redemptions of their investments, worth a total of €4.1 billion. The amount represents 52% of the total value of the fund.
Recent reforms to the Dutch tax system have made the property market less attractive to foreign investors, including raising the property transfer tax to 10.4% for second homes and stricter rent controls for mid-sector homes.
Since January last year fiscal investment institutions have been banned from investing directly in real estate, in a move designed to close a loophole that allowed foreign investors to avoid paying Dutch corporate taxes.
The effect has been to deter international investors such as pension funds from the Dutch market and prompt a sell-off of rental housing, at a time when the new cabinet has made tackling the national housing shortage its top priority.
Vesteda has said it is negotiating with investors to reduce their redemption requests and has given them until April 20 to revise the amount downwards.
At that point the requests will be finalised and the company will have three years to generate the funds to pay them off. A liquidity plan is due to be submitted to investors in June.
Market cooling
But analysts have warned that selling part of Vesteda’s portfolio looks inevitable. The terms of the fund mean investors can only apply for large-scale redemptions every seven years, making this the first opportunity for them to vote with their feet since the tax changes took effect.
Developments in the Dutch property market, where prices have grown by more than 50% in six years but the trend has slowed in the last 12 months, has also encouraged investors to move their capital elsewhere.
Vesteda stressed in its press release that the exodus of investors did not reflect the performance of its residential fund, which it said “has been excellent in recent years”.
CEO Astrid Schlüter told BNR Nieuwsradio: “We are having good talks with our shareholders and we knew this was coming. The last word has not been spoken.”
But she said that the loss of investment capital would make it harder for the government to achieve its targets, such as building 100,000 homes a year, including affordable rental housing.
“Obviously we want capital to flow into the Netherlands, especially for housing,” Schlüter said. “When you see that we are a million houses short in the Netherlands, that means we need to find around €400 billion.”
