Policy book on valuation system of independent living space Subscribe to DeepL Pro to translate larger documents. Visit www.DeepL.com/pro for more information. Version July 2023 Policy book | 3 Foreword The Rent Commission is an independent administrative body, whose duties include testing the initial rent (ex Article 7:249 of the Civil Code), assessing an objection to the annual rent increase (ex Article 7:253 of the Civil Code), passing judgment on the reasonableness of the proposal to reduce the rent (ex Article 7:254 of the Civil Code) and on the reasonableness of the rent increase after home improvement (ex Article 7:255 of the Civil Code). In performing the aforementioned duties, it is bound by laws and regulations. The most relevant statutory provisions are included as appendices in this policy book. These statutory provisions form the starting point for the Rent Commission. The Residential Tenancies Decree is one such statutory provision. It contains an annex in which the so-called valuation system for independent living accommodations is included. This system, which is in fact a points system used to determine the maximum rent of a living space, is applied by the Rent Commission in the procedures referred to above. In recent years, the practical application of the housing valuation system and other relevant legal provisions has led to implementation policies. These implementation policies are the subject of this policy book. It contains the policies from which the Rent Commission proceeds. The Rent Commission will therefore act in accordance with these policies and only deviate from them, with reasons, to the extent justified by the dispute at hand. The present policy book reflects the standing policy of the Rent Commission. This updated version applies to all relevant petitions filed with the Rent Commission on or after July 1, 2023. The Rent Board, dated July 1, 2023 4 | Policy book Table of contents Foreword 3 Version control 7 Chapter 1 - Introduction 8 Chapter 2 - General inFormation 9 2.1 Function of the housing valuation system 9 2.2 Housing in the free sector 9 2.3 Housing valuation system independent living quarters 10 2.3.1 Explanation of concept of independent living accommodation 10 2.3.2 Outside the dwelling, but within the residential building 10 2.3.3 Unfree independent housing 11 2.3.4 Immovable appurtenances 11 2.4 Deviation power HC art. 5 subsection 2 Bhw 11 Chapter 3 - The housing valuation system and the different procedures 12 3.1 Introduction 12 3.2 Review of initial rent 12 3.2.1 Who can make the request? 12 3.2.2 Submission deadline 13 3.2.3 First time lease entered into 13 3.2.4 Housing quality assessment and outcomes 13 3.2.5 Assessment of serious defects 15 3.2.6 Reference date 15 3.2.7 Initial rent determination works retroactively 15 3.3 Annual rent increase and maximum reasonable rent 16 3.3.1 Housing quality assessment 16 3.3.2 Energy performance of living space 16 3.3.3 Self-installed facilities 16 3.3.4 Reference date 17 3.4 Rent reduction based on points 17 3.4.1 Who can make the request? 17 3.4.2 Form requirements 17 3.4.4 Housing quality assessment and outcomes 18 3.4.5 Reference date 19 3.4.6 Self-installed facilities 19 3.4.7 Lower rent effective date 19 3.5 Rent increase after home improvement and maximum reasonable rent 19 3.5.1 Housing quality assessment 19 3.5.2 Self-installed facilities 20 3.5.3 Reference date 20 Policy book | 5 Chapter 4 - The components of the housing valuation system self-sufficient living space 21 4.1 Introduction 21 4.2 Area of rooms 21 4.2.1 What are departures? 21 4.2.2 How is the area of rooms measured? 22 4.3 Area of other rooms 24 4.3.1 What are other spaces? 24 4.3.2 How is the area of other space measured? 25 4.4 Heating 26 4.4.1 Points for heated rooms and other areas 26 4.4.2 Heating elements belonging to the property 26 4.4.3 Collective or individual heating system 27 4.4.4 Interconnecting rooms 27 4.4.5 Other interconnecting spaces 27 4.4.6 Open kitchens 28 4.5 Energy Performance 28 4.5.1 Point allocation old energy label and energy index 29 4.5.2 Points awarded new energy label 29 4.5.3 Derogation authority higher energy label class than A++ 30 4.5.4 Year of construction determines if no valid energy label or Energy Index 31 4.5.5 Reasonable doubt energy label 31 4.5.6 Energy Performance Fee 31 4.6 Kitchen 32 4.6.1 Facilities kitchen 32 4.6.2 Facilities that provide additional quality points 33 4.7 Plumbing 34 4.7.1 Sanitary facilities 34 4.7.2 Facilities that provide additional quality points 35 4.8 Residential facilities for the disabled 36 4.8.1 Residential Facilities 36 4.8.2 Reimbursement costs 37 4.9 Private outdoor spaces 37 4.9.1 Definition of private outdoor space 37 4.9.2 Deductions for no private outdoor space 38 4.9.3 How is the area of private outdoor spaces measured? 38 4.9.4 Balconies and roof terraces 38 4.9.5 Point allocation private outdoor spaces 39 4.9.6 Parking facility 39 4.10 Points for the WOZ value 40 4.10.1 Calculation points for the WOZ value 40 4.10.2 New construction homes and homes located in COROP area 41 4.10.3 High-level renovation 42 4.10.4 Minimum WOZ value 42 4.10.5 Built property under construction 42 4.10.6 No WOZ decision available 43 4.10.7 Maximizing WOZ points to a maximum of 33%. 44 6 | Policy book 4.11 Points in renovation 46 4.11.1 High-level renovation in 2015-2019 46 4.11.2 What does the Rent Commission understand by renovation? 46 4.11.3 Delivery of invoices renovation work 47 4.12 Care home 47 4.12.1 Conditions care home 47 4.13 National monument and homes located in protected city and village landscape 48 4.13.1 National Monument 48 4.13.2 Property located in protected town and village area 48 4.14 Common areas and facilities 49 4.14.1 What is valued in common rooms, other areas and facilities? 49 4.15 End valley 50 Attachments 51 Appendix 1: Appendix I Bhw valuation system independent living quarters 51 Appendix 2: Legislative explanation of valuation system for independent living quarters 55 Annex 3: Municipalities referred to in Annex I, Part A, under section 9.1a. 61 Appendix 4: Overview of rent liberalization limits. 62 Appendix 5: Maximum rent limits for independent housing units 64 Policy book | 7 Version control The present version replaces the May 1, 2022 policy book on valuation of independent living space. The policy book has been amended in the following respects. The present policy book has a different format and structure than previous ones. It has been chosen to focus on (the description of) the implementation policy. The legal text and explanatory notes are included as appendices. This has resulted in changes to the texts. A new chapter has been added that, by way of introduction, outlines the procedures in which the housing valuation system independent living space applies. A laundry room is counted as an essential facility to qualify a dwelling as independent living quarters. A number of additions have been made regarding the energy performance component. - A point allocation is included with tables for all the possible valid energy liaisons/indexes that can occur in procedures. In addition, the deviation authority has been specified if there is an energy label with a class higher than A++. This policy book explains when a parking facility is considered an immovable property. In addition, a section on parking facilities with the various possible valuations is included in the Private Exterior Space chapter (see Section 4.9.6). In the present policy book, the following has been made or changed with respect to component WOZ value: - The policy book includes which energy label/index must be met for the renovation to qualify as a "high level renovation" (and on the basis of which a specific calculation methodology then applies), see Section 4.10.3. - The present policy book explains in detail what the cap on the WOZ is and when it applies. This has been explained with flowcharts and examples. - The Rent Commission has changed its policy for the situation where a relevant WOZ decision is missing. The practice was that we then assumed the so-called minimum value. Because of the Supreme Court ruling of April 22, 2022, the Rent Commission has adjusted its policy. This new policy is now also described in the policy book (section 4.10.6). The present policy book sets out more clearly the five conditions that must be met to be considered a care home within the meaning of the housing valuation system. 8 | Policy book Chapter 1 - Introduction The policy book describes the valuation system for independent living and its application by the Rent Commission. To this end, the policy book is divided into four chapters. The first chapter is this introduction, which briefly describes the information contained in each chapter of this policy book. The second chapter, "General Information," provides outline information on the function of the valuation system for independent living accommodations (hereinafter also referred to as the valuation system), explains some relevant concepts, such as "independent living accommodations," and briefly d i s c u s s e s the power to deviate under Section 5(2) of the Housing Rents Decree (hereinafter also referred to as the Bhw). The third chapter discusses proceedings before the Rent Commission in which the valuation system is applied. These are the procedures in which the initial rent is tested (ex Section 7:249 of the Civil Code), an objection to the annual rent increase is assessed (ex Section 7:253 of the Civil Code), an opinion is given on the reasonableness of the proposal to reduce the rent (ex Section 7:254 of the Civil Code) and on the reasonableness of the rent increase after home improvement (ex Section 7:255 of the Civil Code). For each procedure, the outline of what the procedure entails, what the task of the Rent Commission is, the manner in which the Rent Commission carries out this task and what is considered to be a guideline in this regard is discussed. Legal and procedural aspects such as the reference date are also mentioned. Often an example is given to illustrate this. The fourth chapter describes the housing valuation system itself and explains it by topic . For example, this chapter answers the question of whether points are awarded to a room or space (or facility) and what conditions apply or what the requirements are. The basis for this chapter is Appendix 1A of the Housing Rents Decree, which contains the text and explanation of the housing valuation system for independent living accommodations and to which the Rent Commission is bound. These are included as Appendix 1 (text) and 2 (explanation) to this policy book. In addition to the aforementioned appendices, three other appendices are included in the policy book. Appendix 3 is a list of so-called COROP regions in Amsterdam and Utrecht, Appendix 4 an overview of liberalization limits and Appendix 5 the maximum rent limits for independent housing. Policy book | 9 Chapter 2 - General information 2.1 Function of the housing valuation system The housing valuation system is a system whereby points are allocated to housing based on quality points. To this number of points belongs a maximum reasonable rent (for this dwelling). 1 T h e Rent Commission thus determines what the maximum rent is for the dwelling in question according to the housing rating system. The higher the quality of the property, the more points a property receives and the higher the rent may be. The point system of the housing valuation system is detailed in the Decree on Housing Rents ( hereafter also Bhw). For this decree, see Appendix 1. Example: A self-contained dwelling has 115 points. Based on the maximum rental price limits for self- contained housing as of July 1, 2023, the Rent Commission determines the maximum rental price for a property with this number of points, if requested: €677.36. There are three different housing valuation systems for the different types of residential spaces which are elaborated and explained in the Schedule I of the Bhw: 1. Independent living quarters (Schedule 1A of the Bhw); 2. Undetached living quarters (Schedule 1B of the Bhw); 3. caravan and/or pitches (Schedule 1C of the Bhw). This policy book deals with the housing valuation system for independent living quarters. 2.2 Properties in the free sector The point system applies to housing in the regulated rental sector (social rental housing) and not to housing in the free sector. (Which housing belongs to the free sector and which b el o ngs to the regulated sector is explained in the following paragraphs). The rent in the free sector is determined by tenants and landlords themselves. Tenants do have the option of having the initial rental price, even if this rental price is above the liberalization threshold, reviewed by the Rent Commission within six months of the start of the rental. Section 3.2 of this policy book discusses this in more detail. Parties can also turn to the Rent Commission with a request for an opinion on the rent. The condition for this is that they must have reached agreement before this request can be made. 1 See Appendix 5 to this policy book for the overview of the maximum rent limits for independent housing. The maximum rents can be found in the annual "rent policy" circular. 10 | Policy book Whether a property should be included in the free rental sector or the regulated sector depends on the so-called, annually determined, liberalization limit. The free rental sector is the sector (as of July 1, 1994) with independent living accommodations with a bare rental price higher than the liberalization limit of that year. A dwelling may also be liberalized from the period before July 1, 1994. This refers to dwellings that were first occupied after July 1, 1989 where the initial rental price was above the then liberalization limit. There is a social rental home if the basic rent at the effective date of the rental agreement does not e x c e e d the rent liberalization limit from that year. As of Jan. 1, 2011, the liberalization limit is reset annually on Jan. 1. Before then, a year ran from July 1 to July 1. So year 1989 means from July 1, 1989 to July 1, 1990. Maximum rent limits are indexed annually on July 1. As of Jan. 1, 2023, the liberalization limit was set at €808.06, corresponding to a point total of 136 points. An overview of the rent liberalization limits from 1989 can be found in Appendix 4 of this policy book. 2.3 Housing valuation system independent living quarters 2.3.1 Explanation of independent living accommodation It follows from the explanatory notes to the housing valuation system for independent living accommodations that Section 7:234 of the Civil Code must be followed when interpreting the concept of independent living accommodations. It follows from this article that an independent living accommodation must meet two cumulative conditions that are interpreted by the Rent Commission in the following manner: 1. The home must have its own lockable entrance door. 2. The tenant must be able to occupy the living space without depending on essential facilities outside the dwelling, see below 2.3.2. This means that these amenities belong exclusively to the tenant. In any case, the following essential facilities must be present: - at least one departure; - cooking facilities; that is, a kitchen sink, supply and drainage of water and at least one connection point for cooking with gas or electricity - laundry room (room with a bathtub, shower, sink or lavatory); - a private toilet. If a living space meets these two conditions, then it is an independent living space and the housing valuation system independent living space applies. 2.3.2 Outside the residence, but within the residential building There may be rooms, other spaces and facilities (heating and plumbing) located outside the dwelling but within the residential building. If the use of these rooms and facilities by third parties can be ruled out then they are included in the valuation. If there are common rooms, other rooms, or facilities (heating, kitchen or sanitary facilities) for several independent dwellings, which are located within the residential building , these shall also be scored according to the system for independent living. In this case, the points are distributed proportionally over the number of independent residences within the residential building, regardless of the size of the individual residences (see also paragraph 4.14). Policy book | 11 2.3.3 Unfree independent housing Independent living quarters also include the so-called 'non-exempt dwellings'. These are defined as dwellings in which the tenant does not depend on communal facilities for essential services (see above in 2.3.1), but must use a communal circulation area to reach the rooms or essential services of which he has exclusive use. 2.3.4 Immovable appurtenances Only the (common) rooms, other spaces and facilities that belong to the immovable property are scored with points. This may be because they are physically connected to the living space, or because this has been agreed in the lease. If a separate rental agreement has been entered into for the use of an immovable property (e.g. a parking facility or communal garden) and the rental of this property can be terminated without affecting the rental of the living space, the facility is not included in point valuation. Examples of immovable appurtenances include detached storage, garage and carport. Also included are common areas that serve the tenant, such as recreation room, hobby room, kitchen/pantry, toilets, storage/parking facility, laundry room, guest room and heat insulation. A shared heat and power plant, for example of an apartment complex, is also an immovable attachment. 2.4 Deviation power HC art. 5 subsection 2 Bhw The housing valuation system is a detailed and mandatory system. This means that the Rent Commission values housing in accordance with this system. However, the legislator has provided for a (very limited) possibility to deviate from the valuation system, if the nature of the residential property gives cause to do so. 2 This is the so-called power to deviate from the valuation system in Article 5 paragraph 2 of the Bhw. The Rent Commission makes very cautious use of this. In practice, the Rent Commission makes use of this derogation option in the case of a modern facility that has not (yet) been taken into account in the valuation system . So far, this is limited to a home telephone with video. The Rent Commission values this facility with 0.25 point. 2 This can occur if the strict application of the housing valuation system does not do sufficient justice to the quality of a dwelling, according to the explanatory memorandum to the Bhw. An example given is dwellings that "due to a very small area do not score 140 points, but are of excellent quality; for example, very small but luxurious apartments". 12 | Policy book Chapter 3 - The housing valuation system and the various procedures 3.1 Introduction The housing valuation system self-contained housing plays a role in four proceedings before the Rent Commission: 1. review of initial rent pursuant to Section 7:249 of the Civil Code; 2. Objection to annual rent increase pursuant to Section 7:253 of the Civil Code; 3. Rent reduction based on points pursuant to Article 7:254 of the Civil Code; 4. Rent increase after home improvement ex 7:255 BW. This chapter describes in hooFd lines the review framework used by the Rent Commission in these procedures and the relevant procedural aspects of the procedures. The framework includes how the housing valuation system is involved in these four procedures. For complete information on the assessment frameworks mentioned here, please refer to the relevant policy books. 3.2 Review of initial rent The tenant can have the agreed initial rent reviewed by the Rent Commission by submitting a request as referred to in Section 7:249 of the Dutch Civil Code. If such a request is received, the Rent Commission has the task of ruling on the reasonableness of the agreed initial rent. 3 In this procedure, the Rent Commission tests two issues. First, it determines whether the agreed rent is in reasonable proportion to the quality of the housing. Secondly, the Rent Commission tests whether there are serious defects that were present at the start of the rental agreement and whether these serious defects give reasons to reduce the rent temporarily. 4 3.2.1 Who can make the request? The initiative to submit a request for initial rent review lies with the tenant. 5 Tenants of self- contained housing with both a deregulated rent (read: free-sector housing) and a non-deregulated rent (read: social housing) have the 3 Article 4(2)(a) of the Housing Rents Implementation Act. 4 Article 4(2)(a) Uhw joins Article 12 Uhw. 5 Article 7:249 (1) and (2) BW. Policy book | 13 possibility of having the initial rent reviewed. 6 This means that it is possible to have an agreed rent above the then current liberalization limit reviewed for reasonableness of the rent. 3.2.2 Submission deadline The filing period for rent control depends on whether the lease is for an indefinite period or a temporary lease within the meaning of Section 7:271(1), second sentence, of the Dutch Civil Code (hereinafter referred to as a temporary lease). It is possible to submit a request for initial rent review to the Rent Commission before the commencement date of the lease. 7 Indefinite duration In the case of a lease of indefinite duration, article 7:249 paragraph 1 of the Civil Code applies and the request must have been submitted within six months after the commencement date of the lease. This is a strict deadline, which means that the request is inadmissible if this deadline is exceeded. The General Extension of Time Limits Act does not apply in these proceedings as far as the deadline for submitting the petition is concerned. Temporary rental In the case of a temporary lease within the meaning of the Wet Doorstroming Huurmarkt of 2 years or less, Section 7:249 (2) of the Dutch Civil Code applies and the tenant has the option of submitting a request for review of the initial rent until no later than six months after the expiration of the lease. In case a second temporary lease is entered into with the same tenant, the temporary lease is continued as a (new) indefinite term lease. In this case, the tenant has the possibility to file a petition within six months after the commencement of the (new) indefinite term lease (Article 7:249 paragraph 1 DCC). 3.2.3 First time lease entered into Requests can only be submitted if (the same) parties entered into a rental agreement for this accommodation for the first time. If the parties later enter into a new agreement (for the same accommodation), no initial rent can be tested. This also applies in cases where a sitting tenant has entered into a new rental agreement with a new landlord. The same applies to tenants who rent on the basis of continuation of the lease on the grounds of subletting8, continuation of the lease after death9 or subletting. 10 Even if a tenant derives his right to rent from an authorization from the subdistrict court, as follows from Section 7:270 of the Dutch Civil Code, it is not possible to submit a request for verification of the entry-level rent. 3.2.4 Housing quality assessment and outcomes The Rent Commission tests the agreed initial rent on the basis of the rules for the valuation of the quality of the dwelling provided in Article 10 , paragraph 1 Uhw. 11 These rules can be found in the Housing Rents Decree (Bhw), in which the housing valuation system is elaborated. To this end, an investigation takes place in the housing accommodation, which is carried out by an investigator from the 6 Art. 7:247 jo. 7:249 BW. 7 Parliamentary Papers II 1983/84, 17 431, no. 6, p. 27. 8 Art. 7:266 BW. 9 Art. 7:268 BW. 10 Art. 7:269 BW. 11 Art. 11(2) Uhw. 14 | Policy book Rent Commission. In an investigation for housing valuation and the corresponding rent, the investigator assesses the quality of the living space and therefore measures the living space, among other things. This is necessary to make a point count. To do this, the investigator uses the Rent Check. 12 The Rent Commission examines whether the initial rent is higher or lower than the maximum reasonable rent applicable to the property in question. The Rent Commission indicates in its ruling whether the agreed rent is reasonable or unreasonable. If the agreed rent is not reasonable based on the housing valuation system, it indicates which rent it believes is reasonable, namely a rent at the level of the maximum rent limit corresponding to the quality of this accommodation. The assessment can lead to four scenarios, which are explained in more detail below. If the initial rental price of the dwelling is above the liberalization limit and the Rent Commission determines that the maximum rental price of that dwelling is above the liberalization limit, the Rent Commission rules that the agreed initial rental price is reasonable. After all, the rent is liberalized and remains so. Example: Tenant X is renting a studio in Amsterdam as of July 1, 2023. There is an initial rent of € 1150.00 agreed. The Rent Commission determines that 150 quality points are assigned to the living space. The initial rental price of € 1150.00 is above the liberalization threshold (as of January 1, 2023: € 808.06). The maximum reasonable rent associated with 150 points for this property is € 897.09. Since both the initial rental price and the maximum rental price are above the liberalization threshold, the Rent Commission rules that the agreed rental price of €1150.00 is reasonable. If the initial rental price of the dwelling is above the liberalization threshold and the Rent Commission determines that the maximum rental price of that dwelling is below the liberalization threshold, the Rent Commission rules that the agreed initial rental price is not reasonable. It indicates which rent is reasonable, namely a rent at the level of the maximum rent limit corresponding to the quality of this accommodation. Example: Tenant X is renting a studio in Amsterdam as of July 1, 2023. There is an initial rent of € 1150.00 agreed. The Rent Commission notes that 135 quality points are assigned to the housing unit. The initial rental price of € 1150.00 is above the liberalization threshold (as of January 1, 2023: € 808.06). The maximum reasonable rent associated with 135 points for this property is € 802.94. Since the initial rent is above the liberalization threshold, but the maximum rent for the dwelling is below the liberalization threshold, the Rent Commission rules that the agreed rent of € 1150.00 is not reasonable. It also indicates which rent is reasonable, namely a rent at the level of the maximum rent limit corresponding to the quality of this accommodation. If the starting rent price of the dwelling is below the liberalization threshold and the Rent Commission determines that the starting rent price of the dwelling is above the maximum rent limit for that dwelling, the Rent Commission rules that the agreed rent is not reasonable. It will indicate which rent is reasonable, namely a rent at the level of the maximum rent limit corresponding to the quality of the accommodation in question. 12 T h e R e n t C o m m i s s i o n ' s website features the Rent Check . The Rent Commission has developed this tool in cooperation with the Woonbond and Vastgoed Belang. Parties can also use this tool themselves. Policy book | 15 Example: Tenant X is renting a studio in Amsterdam as of July 1, 2023. There is an initial rent of € 700.00 agreed. Tenant has the initial rent assessed by the Rent Commission. The Rent Commission determines that 118 quality points should be assigned to the accommodation. The initial rent of € 700 is below the liberalization threshold (as of January 1, 2023: € 808,06). The maximum reasonable rent for this property is € 696.16. After all, the property has been awarded 118 quality points. Since the agreed initial rent (€ 700.00) is below the liberalization threshold and this initial rent is above the maximum rent for the dwelling (€ 696.16), the Rent Commission rules that the agreed rent of € 700 is not reasonable. It indicates which rent is reasonable, namely a rent at the level of the maximum rent limit corresponding to the quality of the living space in question. If the initial rental price of the property is below the liberalization limit and the Rent Commission determines that this initial rental price is less than oF equal to the maximum rental price limit for that property, the Rent Commission will rule that the agreed initial rental price is reasonable. Example: Tenant X is renting a studio in Amsterdam as of July 1, 2023. There is an initial rent of € 700.00 agreed. Tenant has the initial rent assessed by the Rent Commission. The Rent Commission determines that 125 quality points should be assigned to the housing unit. The initial rent of € 700 is below the liberalization threshold (per January 1, 2023: € 808,06). The maximum reasonable rent for this property is € 740.14. After all, the property has been awarded 125 quality points. Since the agreed initial rent (€ 700.00) is below the liberalization threshold and this initial rent is below the maximum rent for the dwelling (€ 740.14), the Rent Commission rules that the agreed rent of € 700 is reasonable. 3.2.5 Assessment of serious defects The Rent Commission further assesses whether there are serious defects as follows from the defects book and, if so, whether the rent is temporarily reduced. 13 This is the case for indefinite leases and for temporary leases. A defect notice to the landlord is not required in this procedure. See further the Rent Commission's Defects Book on the Rent Commission's website. 3.2.6 Reference date In the procedure for assessing the initial rent, the reference date is the commencement date of the lease. The valuation of the quality of living space and the reasonableness of the rent are therefore assessed according to the condition of the living space as it was on the effective date of the rental agreement. 3.2.7 Initial rent determination works retroactively The initial rent determined by the Rent Commission works back to the effective date of the lease. It is therefore possible that at the start of the rental agreement, the parties had agreed on a rent that was above the liberalization limit and that after the proceedings before the Rent Commission, the starting rent price is still below the liberalization limit, as a result of which the rules for social rental housing apply to that property. 13 Which defects the Rent Commission rules on are further detailed in the defect book. 16 | Policy book 3.3 Annual rent increase and maximum reasonable rent The housing valuation system also plays a role in proceedings concerning annual rent increases within the meaning of Section 7:253 of the Civil Code. In these proceedings, the Rent Commission has the task of ruling on the reasonableness of the landlord's proposal to increase the rent. 14 Given the content and scope of this policy book, it would go too far to discuss the many rules of the annual rent increase procedure here. Only those rules that interface with the housing valuation system are discussed below . All procedural rules on the 7:253 BW are further detailed in the Rent Increase and Rent Reduction Policy Book of the Rent Commission. 3.3.1 Housing quality assessment In the 7:253 BW procedure, the Rent Commission tests the quality of the living space on the basis of the housing valuation system if the tenant objects to the annual rent increase invoking one of the following grounds for objection: The tenant objects to the housing valuation in the rent increase proposal. The tenant objects to the proposed rent, including the proposed rent increase, because it exceeds the maximum reasonable rent. 15 The Rent Commission only gives an opinion on the quality of housing and housing valuation if the housing valuation of the property in question is the subject of dispute between the parties. Thus, the Rent Commission only involves the housing valuation in question if a party expressly requests it. Thus, the Rent Commission does not do so ex officio in these proceedings. This means that the tenant must invoke one of the above grounds for objection before the Rent Commission will conduct a preliminary investigation into the housing quality. Example: Tenant X rents an apartment in The Hague. The (bare) rent is € 700.00. He receives a letter from the landlord with a rent increase proposal, stating that the rent will be increased by 2.3%, which comes down to a rent of € 716.10. Tenant X does the Rent Check and comes out with 101 points. The maximum rent that corresponds to this is € 589.45. He objects to the rent increase as the rent is higher than the maximum allowable rent for that property. The Rent Commission starts a preliminary investigation and sends an investigator to the house. The investigator arrives at a score of 119. The maximum rent for this is € 702.44. The Rent Commission rules in this case that the proposed rent increase is not reasonable. A rent increase of € 2.44 (0.35%) is considered reasonable. 3.3.2 Energy performance of living space Energy performance is part of the housing valuation system for independent living accommodation. In the annual rent increase procedure, the Rent Commission does not form its own opinion on the energy performance of the housing accommodation, if the owner of the housing accommodation has issued the tenant with an energy performance certificate for the housing accommodation. Whether an energy label has been issued for a dwelling can be checked on the website http://www.ep-online.nl. 3.3.3 Self-installed facilities Article 13(4) Uhw provides that amenities installed by tenants themselves, as a result of which the housing benefit can be deemed to have increased, are not taken into consideration when valuing housing quality. This provision does not cover the situation where a tenant has 14 Article 4(2)(b) Uhw jo. Article 13 Uhw. 15 Article 13(5) Uhw. Policy book | 17 against the landlord to make certain refurbishment improvements. In that case, the tenant's performance should be factored into the rent as payment in kind. 3.3.4 Reference date In the annual rent increase procedure, the reference date used for valuing the quality of housing is the date on which the rent increase should have taken effect according to the rent increase proposal. 16 3.4 Rent reduction based on points A tenant can obtain a rent reduction through proceedings Article 7:254 BW through the Rent Commission. In the case of a request for a rent reduction pursuant to Article 7:254 of the Civil Code, the Rent Commission has the task of ruling on the reasonableness of the proposal to reduce the rent. 17 3.4.1 Who can make the request? Tenants of self-contained housing with a non-liberalized rent (read: social rented housing) have the option of applying to the Rent Commission for a rent reduction based on points. This means that tenants in the free sector cannot have the rent reduced on the basis of this procedure. This procedure can be filed by the tenant at any time and there are no restrictions as to how often the tenant wishes to use this procedure. The outcome of this procedure is only valid for the future and therefore not retroactive (which is different from the procedure to test the initial rent under Article 249 of the Civil Code, see above). 3.4.2 Form requirements The tenant may obtain a rent reduction by submitting to the landlord a written proposal to reduce the rent. If the landlord agrees to the proposal then the rent will be reduced. Here, silence does not constitute acceptance. If the landlord does not accept the proposal or he does not respond to the proposal, the tenant can ask the Rent Commission to determine the rent reduction through a procedure pursuant to Article 7:254 of the Dutch Civil Code. The rent reduction proposal must meet a number of form requirements. According to Article 7:252 of the Civil Code, the reduction proposal must be submitted in writing to the landlord at least two calendar months before the proposed effective date. In addition, this article provides that the reduction proposal must include the following: the prevailing rent; The amount of the change (i.e., of the proposed reduction); the (new) proposed rent; the proposed effective date. In addition, the reduction proposal must include a rating of the quality of the housing on which the proposal is based. 18 Tenants can generate such a rating on the Rent Commission's website using the Rent Check 16 Article 13(6) Uhw. 17 Article 4(2)(c) of the Housing Rents Implementation Act. 18 Art. 7:252(3) BW. 18 | Policy book 3.4.3 Submission deadline Section 7:254 of the Civil Code provides that the tenant m u s t submit the request to the Rent Commission within six weeks of the proposed effective date for the rent reduction, according to the rent reduction proposal. The tenant can no longer enforce the proposed rent reduction if he allows this deadline to expire. If the tenant proves that the landlord refused the proposal then the tenant can go to the Rent Commission before the proposed effective date has passed. 3.4.4 Housing quality assessment and outcomes The Rent Commission tests the rent reduction proposal on the basis of the valuation system for independent living accommodations. 19 The Rent Commission examines whether the applicable (bare) rent is higher or lower than the maximum reasonable rent for the accommodation in question. To this end, an investigation takes place in the living space, during which the Rent Commission investigator makes a point count and calculates the corresponding maximum reasonable rent. In its ruling, the Rent Commission indicates whether the tenant's proposal is reasonable or unreasonable and what rent is considered reasonable by the Rent Commission. The assessment can lead to three scenarios, which are detailed below. If it is found that the prevailing rent is higher than the maximum reasonable rent then the proposal is reasonable in the opinion of the Rent Commission. The Rent Commission hereby also indicates the rent to which this reasonable proposal leads. In the event the proposed rent is higher than the maximum reasonable rent then the Rent C o m m i s s i o n ' s j u d g e m e n t i s that the proposal is reasonable. The proposed rent is reasonable even if it is above the maximum rent. Example: The prevailing rent is €700.00. Tenant X proposes a rent reduction to € 600.00. The Rent Commission's investigator arrives at a point score of 101. The maximum associated rent is € 589.45. The Rent Commission rules in this case that the proposed rent reduction is reasonable and sets the rent at the proposed rent: € 600,00. The request will not be considered reasonable by the Rent Commission if the current rent is higher than the maximum reasonable rent, but the proposed rent is lower than the maximum reasonable rent. In such a case, the Rent Commission will however rule a rent reduction. The Rent Commission will rule that a rent reduction resulting in a rent equal to the maximum reasonable rent is reasonable in its judgment. Example: The prevailing rent is €700.00. Tenant X proposes a rent reduction to € 600.00. The Rent Commission's investigator arrives at a point score of 115. The maximum rent that goes with this is € 677.36. The Rent Commission rules in this case that the proposed rent reduction is not reasonable and determines that a rent reduction to € 677.36 is reasonable. If the prevailing rent is found to be less than the maximum reasonable rent then the proposal will not be