Published on : 08 April 20223 min reading time
This allows for a good match between income, household size and rent level. This allows entry-level tenants with limited income to cover housing costs.
Income and family composition change over time. Entry-level earners may acquire a (much) higher income within a few years. Income may decrease when a tenant retires. Family composition may also change. Through cohabitation, expansion of the family or death.
That is why it is a good idea to periodically check whether the income still corresponds to the rent paid for the unit and whether the unit still corresponds to the composition of the household.
Rent increase in case of higher income
If the periodic test shows that income has increased significantly, then an above-average rent increase is evident. Maintaining a deliberately low rent for that property is then no longer necessary for the tenant in question. The tenant can make his or her own choice. If he chooses to stay in the house, he will pay a significantly higher rent in the future. This additional rental income can be used to keep housing costs affordable for all tenants and to maintain housing quality.
If the tenant is not willing to pay the extra rent, he or she can look for a more expensive unit or a house to sell. Moving is certainly not a requirement. Strong tenants can help prevent segregation of income groups. If the tenant moves, the house will be vacated and can be reallocated appropriately. In this way, affordable housing ends up with the tenants who, based on their income, are dependent on them.
No or limited rent increase
If the periodic test shows that incomes have decreased significantly, then a limited or temporary rent increase is evident. Also, since in this case the tenant is likely to be entitled to an additional rent increase, the rent is still due. If the decline in income is found to pose structural risks to affordability, moving to more affordable rental housing is a solution. Some facilities are willing to guide overpriced tenants to less expensive housing based on their income, if possible. Especially in cases of distress.
In order to keep housing costs affordable, appropriate allowances cannot be made without periodic review.