Assessment framework for permit requirement for converting (non-)self-contained housing: what are the limits?

In this judgment, reference is made to the legislative history of Article 21 of the Housing Act (Hvw). The permit requirement for merging, withdrawing, and converting housing aims to prevent increased scarcity in the housing market due to changes in the housing stock. Under Articles 2 and 21 Hvw, the municipal council may include a permit requirement in the Housing Ordinance for converting self-contained into non-self-contained housing if this is necessary and suitable to combat disproportionate and inequitable effects of housing scarcity.

Article 21(1) Hvw states that it is prohibited to merge, withdraw, or convert housing belonging to a category designated in the Housing Ordinance for preservation or composition of the housing stock and located in an area designated in the ordinance, without a permit from the municipal executive. Article 21(1)(c) Hvw specifically mentions converting a self-contained dwelling into a non-self-contained dwelling and keeping it converted. Article 21(1)(d) Hvw also covers cases where a non-self-contained dwelling is converted into a self-contained dwelling and kept converted.

Case law from the Council of State also shows that Article 21 Hvw applies to non-self-contained housing (rooming), so a permit is required in those situations as well (Council of State, 18 November 2020, ECLI:NL:RVS:2020:2778 para. 5.2). Rooming means converting a self-contained dwelling into non-self-contained rooms. In practice, this means that two permits may be required under the Hvw for rooming: a conversion permit (Article 21(1)(c) Hvw) and a housing formation permit (Article 21(1)(d) Hvw). See Parliamentary Papers II (Explanatory Memorandum), 2021/22, 36190, no. 3, p. 45.

For converting rooms (non-self-contained housing) into studios (self-contained housing), a permit requirement also applies under Article 21(1)(d) Hvw (see Parliamentary Papers II, 2021/22, 36190, no. 3, p. 45).

Finally, note that the zoning plan may also stipulate that converting self-contained into non-self-contained housing (rooming) is prohibited or that certain uses are not allowed (Parliamentary Papers II, 2021/22, 36190, no. 3, p. 14).

The case concerns the permit requirement included in the Housing Ordinance The Hague 2019 (Hv 2019) and 2023 (Hv 2023). The municipality initially granted an environmental permit for converting self-contained housing into non-self-contained housing. After objections from neighbors, the municipal executive revoked the permit upon reconsideration and rejected the application based on a “changed view” reflected in regulations. Following this rejection, several proceedings were conducted regarding the permit requirement for conversion, with similar legal questions before courts. Four of these cases were heard simultaneously by the Council of State on 19 July 2024. The judgment focuses on whether the municipality sufficiently substantiated that the permit requirement applies to the category of high-end self-contained owner-occupied homes.

The Administrative Jurisdiction Division of the Council of State held in the aforementioned judgment that the District Court had wrongly considered, in the present case, that the municipal council may only exercise its power to introduce a permit requirement for withdrawal, conversion or housing division if this is necessary and suitable for combating disproportionate and unbalanced effects arising from the scarcity of “affordable housing”. The Council of State refers to Article 2(1) of the Housing Act, which was amended on 1 July 2019 in this respect, removing the word “affordable” from the provision (see also the judgment of 23 June 2021, ECLI:NL:RVS:2021:1336). The Council of State further pointed to several earlier judgments in which the criteria of “necessity” and “suitability” were addressed. For example, a municipality may designate the entire housing stock for the entire territory of the municipality. However, “scarcity” may not be assumed without adequate substantiation. The municipality must therefore substantiate “necessity” and “suitability” (see the judgment of 29 April 2020, ECLI:NL:RVS:2020:1157). In doing so, the municipality must, according to the Council of State, distinguish between “housing types” and “price segments”, noting that scarcity can be established at district level.

However, if the municipality sufficiently substantiates that there is scarcity of certain housing types and price segments across the entire municipality, then this need not be further substantiated at district level (see the judgment of 8 February 2023, ECLI:NL:RVS:2023:484). The Council of State also held that price segments may differ per municipality and that it is up to the municipality to delineate these price segments.

In the present 2024 case, the Municipality of The Hague had not done so, which forced the District Court to derive the boundaries from the Housing Agenda. A housing agenda is a policy document of a municipality that guides housing policy and aims to steer the housing market in terms of affordability, availability and quality.

Returning to the boundaries for price segments: in its 2024 overview judgment, the Council of State held that the Municipal Executive had sufficiently explained at the hearing before the Council of State that the boundaries of the segments must be based on the WOZ-value, not on the purchase price of a dwelling. For the WOZ-value of the dwelling, the most recent WOZ-value at the time of the decision on objection must be used. See also the judgment of the Council of State of 12 February 2025, ECLI:NL:RVS:2025:513. The assessment of the housing stock need not be carried out by an external party (Council of State, 4 November 2020, ECLI:NL:RVS:2020:2646). However, the municipal council must substantiate the permit requirement on the basis of objective data (Council of State, 14 December 2022, ECLI:NL:RVS:2022:3753).

In its 2024 overview judgment, the Council of State held that the policy memorandum used by the Municipal Executive of The Hague provided sufficient substantiation that scarcity existed in all segments and that the permit requirement for conversion was necessary and suitable. Decisive for this assessment were the studies used and the analysis tailored to the Municipality of The Hague. The Municipal Executive had also sufficiently substantiated that, in the context of preserving the housing stock and enabling market mobility, the entire municipal territory could be designated.

The foregoing leads to the conclusion that the municipal council was permitted to include a permit requirement for the conversion of housing in the Housing Ordinances 2019 and 2023. The policy memorandum thus also sufficiently substantiated that there was scarcity and disproportionate and unbalanced effects thereof, including in the higher segment.

However, the Council of State nevertheless upheld the appeal in this case, because the Municipal Executive wrongly failed — in light of the transitional provision in Article 8:1 of the 2023 Housing Ordinance — to assess the decision on objection on the basis of the legislation applicable at the time of the primary decision (paras. 30–32). The Municipal Executive should have examined whether, for those invoking the aforementioned provision (the permit applicants), the 2019 Housing Ordinance as it applied at the time of the primary decision was more favourable than the 2023 Housing Ordinance.

What is also noteworthy about this judgment is that the Council of State once again confirmed that, through the doctrine of incidental review, the administrative court may assess the lawfulness of a generally binding regulation that is not a formal act of parliament, such as the permit requirement in the Housing Ordinance. This incidental review entails that the administrative court examines whether the regulation conflicts with higher-ranking legislation. In doing so, it also assesses whether the generally binding regulation provides a sufficiently sound legal basis for the decision at issue. In this indirect form of review, general legal principles and the general principles of good administration (as laid down in the General Administrative Law Act) play an important guiding role. The review is conducted in the manner set out by the Council of State in its judgment of 12 February 2020 (ECLI:NL:RVS:2020:452).

If the administrative court, due to inadequate reasoning by the administrative authority or due to careless preparation, is unable to assess whether there is a conflict with higher-ranking legislation, general legal principles or the principle of proportionality, it may “disapply” the regulation and “annul” the decision based on it.

The Housing Act enables municipalities to introduce a permit requirement, via a municipal Housing Ordinance, for the conversion of independent into non-independent housing accommodation, and vice versa. This does, however, require proper substantiation. The overview judgment shows that a provision in the Housing Ordinance may be challenged through indirect review in an (appeal) procedure. This may occur in an (appeal) procedure concerning the refusal of an environmental permit for the conversion of a dwelling. The court may annul the decision based on the provision if the provision in the Housing Ordinance must be disapplied.

Our firm regularly advises and litigates on this subject. Please feel free to contact our Real Estate team.

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