Brexit Is Making It Even Harder to Find a Flat in Amsterdam

(Bloomberg Businessweek) -- After more than three frustrating months looking for a place to live, Laura van Overveld saw a listing for a one-bedroom apartment close to central Amsterdam that seemed promising. Although the price was a bit of a stretch at €285,000, she called the agent to schedule a viewing. The response: Forget it, 90 others were in line ahead of her. “You get the feeling that you’re just searching for nothing,” says Van Overveld, 27, an account manager at an online finance company who’s now renting a cramped flat with two other women. “Every time you see something, there are people—couples or investors—who can pay more.”

The woes of the likes of Van Overveld and, presumably, the 89 others who didn’t get the apartment are weighing on Amsterdam officials as they face an influx of wealthy newcomers because of Brexit. Dozens of companies have added Amsterdam offices as a result of the U.K.’s impending departure from the European Union, and some 2,400 jobs have been created in the Netherlands, with officials predicting many more will come. Real estate agents say they speak English with half the buyers or renters who show up for home viewings, and lender ABN Amro Group NV has stationed a Brexit team of 10 people at Amsterdam’s airport to offer mortgages to potential homebuyers flying in from London. “The people and companies coming here are a blessing,” says Udo Kock, the Amsterdam official responsible for economic affairs. “But given that the supply of housing is limited, every increase in demand leads to more pressure on the market.”

The city of 860,000 is already struggling to provide shelter for its residents. To meet demand, the metropolitan area needs to add more than 40,000 homes—6.6 percent of the total market, consulting firm Capital Value BV estimates. The median home price has jumped 80 percent in the past four years, to €448,000 ($505,000). With most places subject to bidding wars that end well above asking prices, Van Overveld’s real estate agent advised her to consider only apartments listed at about 20 percent below what she could afford. “Everything in my price range has all sorts of issues, like deferred maintenance or impractical layouts,” Van Overveld says. “You need a small bed for some of them, because a normal-sized one literally doesn’t fit between the walls.”

The city last year said it aims to add 7,500 homes annually through 2025, a third of them designated social housing, with rents topping out at €711 a month. Officials have proposed a ban on rentals of newly built homes to keep landlords from snapping them up and pushing potential middle-class buyers out of the market. And the government is considering what it calls an “emergency button” to cap rents when they’re rising too fast. “We don’t want to become like New York, with a lot of rich and poor people and few in between,” says Laurens Ivens, the city official in charge of housing.

Those proposals have sparked intense opposition from developers and landlords. Institutional investors say rent controls would be counterproductive by making it impossible to earn a reasonable profit from housing. With construction costs and land prices also rising sharply, returns are already low, and pension funds and other typical backers of such projects would likely balk at anything less, says Gertjan van der Baan, chief executive officer of Vesteda, an investment company that owns 28,000 apartments in the Netherlands. “The only remedy to the housing problem is to build more,” he says. “An emergency button to cap rents would scare off investment” and limit the supply of new homes.

Even if Britain were to call off its exit from the EU, some of the jobs and the people who fill them would likely continue to flow to Amsterdam. After seven years in London, Hannah Al-Sad, 29, was looking for an adventure, and with Brexit looming she jumped at an offer from an ad agency in Amsterdam. For her first month, she says the company arranged a “really nice” apartment near Vondelpark, a green oasis just outside the central canal zone. The trouble began when she had to find her own place: Agents gave would-be renters 10-minute time slots, mostly during working hours, and by the time Al-Sad got to the better flats, others had already made offers and “the chance was gone.” After about a dozen viewings, she finally landed a small apartment at a far higher price than she’d expected. Finding it was, Al-Sad says, “a stupid game.”

To contact the editor responsible for this story: David Rocks at drocks1@bloomberg.net

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