Maximising returns: choosing between self-contained and shared accommodation

Maximising returns: choosing between self-contained and shared accommodation

Are you considering letting a property and unsure whether to offer self-contained or shared accommodation? With the introduction of the Affordable Rent Act, this choice is more important than ever. Which option gives the best return? What tax advantages are available? In this blog, we explain which letting strategy makes the most financial sense in the current market, with a particular focus on Rotterdam.

As letting agents in Rotterdam, Riva is often asked which option offers better financial returns: letting self-contained accommodation or dividing a property into individual rooms with shared facilities. The introduction of the Affordable Rent Act has made the question even more relevant. Rent regulation, taxation and operating costs all play a part in determining a profitable strategy. It is also essential to consider the permits required. In many municipalities, including Rotterdam, a conversion permit is needed when letting to three or more tenants. So the choice between self-contained and shared accommodation depends not only on returns but also on whether the necessary permits are available.

Letting permits

In many municipalities, including Rotterdam, a conversion permit is required when letting to three or more tenants in one property. This means a property must formally be converted for room letting before rooms may be let as separate units with shared facilities. Municipalities often impose additional conditions, such as fire safety measures and minimum floor areas per room.

For example, in certain Rotterdam neighbourhoods there is a cap on the number of conversion permits issued. As a result, even if a property is suitable, a landlord may be unable to obtain a permit and have to let it as a self-contained home. The decision therefore depends not only on financial returns, but also on the regulations of the municipality concerned.

What is the difference between self-contained and non-self-contained accommodation?

To make a fair comparison, it is important to distinguish clearly between self-contained accommodation and accommodation with shared facilities.

1. Self-contained accommodation: These are homes or apartments with their own essential facilities, including a kitchen, toilet and shower. Tenants therefore have complete privacy and live independently without communal areas.
2. Non-self-contained accommodation: These are rooms in a larger property where tenants share facilities such as a kitchen or bathroom. Examples include student houses and shared apartments.

Rent regulation and its impact on rental prices

The Affordable Rent Act has brought many mid-market rental homes under rent regulation, meaning landlords can no longer freely determine the rent in every case. This has different implications for self-contained and shared accommodation:

1. Self-contained accommodation: Homes with fewer than 186 WWS points fall within the regulated sector, where the maximum rent is fixed and landlords can often charge less than before. Only properties with more points can still be let in the private sector. There, landlords can set their own rents, generally enabling higher returns.
2. Non-self-contained accommodation: Room rents are also assessed under the housing valuation system, but the number of points per room is generally more favourable relative to the rent. This often makes room letting more attractive.

Enforcement of maximum rents has also become stricter, particularly for self-contained properties. Municipalities now have the power to impose penalties for violations. So if there was ever a time to reconsider how you want to let your property, it is now.

Taxes and tax advantages

In addition to rent regulation, taxes play an important role in determining the most profitable rental strategy.

1. Self-contained accommodation: Rental property generally falls under Box 3 of Dutch income tax (assets), meaning rental income is not taxed directly, but tax is levied on the property’s WOZ assessed value. For long-term letting of a home previously occupied by the landlord, mortgage interest relief may be available.
2. Non-self-contained accommodation: Landlords who let rooms in a home they also live in may benefit from the room letting exemption. This means rental income of up to € 6,324 per year (the limit set for 2025) remains tax-free. As with self-contained accommodation, letting rooms usually falls under Box 3, but with more tenants per property, returns per square metre may be higher.

Operating costs and returns

In addition to taxes and rent regulation, operating costs also influence profitability.

1. Self-contained accommodation: Generally involves higher maintenance and service costs per property but lower management costs because there are fewer tenants per building. The Affordable Rent Act also means less flexibility in setting rents.
2. Non-self-contained accommodation: Generally produces higher income per square metre because there are several tenants. More management is needed because tenants change and facilities are shared, but rent setting is generally subject to fewer restrictions. It is also commercially attractive because demand for rooms in cities such as Rotterdam is very high. A property suitable for room letting will almost always find tenants.

Which option is more financially advantageous?

The choice between self-contained and shared accommodation depends on factors such as location and property characteristics. In Rotterdam, where demand for affordable homes is strong, room letting can be more attractive because of higher rental income per square metre and less restrictive regulation. On the other hand, letting a self-contained property often offers greater stability and less management work.

For landlords seeking maximum returns without being too constrained by the Affordable Rent Act, dividing a property into rooms with shared facilities can be a profitable alternative. However, it requires more active involvement and management. The decision also depends on the availability of permits. If you have a conversion permit and a suitable property, room letting can be highly profitable. Every situation is different, so personal advice remains the best approach.

Contact

Do you have any questions about self-contained or shared accommodation, or is there anything else we can help with?

Contact us by emailing info@rivarentals.com.