Introduction
The Dutch housing market has come under close scrutiny in the past few years. What is now a structural shortage of housing - largely dating from the crisis between 2008 and 2015 - continues to push up rents and purchase prices on the housing market. Despite these higher prices, it has proved impossible to provide enough housing and eliminate this shortage. The nitrogen emissions crisis, high construction costs, excessively tight planning capacity, higher land prices with multiple secondary restrictions combined with restricted official capacity are just some of the immense challenges facing the sector.
There is unfortunately no clear-cut solution to the situation on today’s housing market. Yet one thing is certain: the complex structure of the Dutch housing market needs a drastic overhaul, as leading economists and professors1 have advocated before. The difficulty lies in the timing. If you were to introduce such widespread reforms now, it would mainly lead to a further reduction in new construction and in fact worsen the affordability and availability of housing. This is quite apart from the fact that it would be practically infeasible to implement such far-reaching changes to our taxation system in the short term, while this is precisely where a significant number of reforms to the housing market are required.
A gradual and anti-cyclical approach to these reforms would therefore seem to be the correct way to create a stimulus-free housing market in ten to fifteen years’ time, one in which all current and future residents of the Netherlands are able to live in affordable owner-occupier or rental homes. It would also make the best-possible use of the total available capital of housing corporations, private households and investors in expanding housing stock and making it more sustainable.
In this report we examine this major overhaul of the housing market but in doing so we cannot ignore current events. Several minor adjustments have been made in the past few years in order to improve the affordability of housing, especially in the unregulated rental market. This issue of affordability is also tied up with a potential amendment to legislation that would result in increased rent regulation. According to the Dutch government, the solution lies in creating a new rental segment (social+) that will guarantee the affordability and availability of rental homes outside the social sector.
In this report we analyse the effects of the proposed rent regulation and the expected impact on investor behaviour and learn from the effects of similar regulations introduced in other countries. Finally, we provide input on solutions designed to yield the correct balance of affordability and investability.
(1) Economisch perspectief voor een grondige renovatie van de woningmarkt (Economic perspective for a widespread overhaul of the housing market) – Groot, S., M. Bani, E. Barendregt et al (2022) ESB 107 (4811)
