I always like listening to podcasts on the plane. I often listen to Vastgoed gezocht from BNR. I also enjoy following the Huizenmarkt posts on Instagram. We ourselves also write a weekly and monthly update on the housing market. De Woonbond (the Dutch tenants' association) and Gert-Jan Bakker on social media get under my skin. I often wonder: do they not understand it, or do they not want to understand it? I think everyone is in favour of affordable housing. But what is affordable? And how are we going to make it happen?
1. The reality of the housing market
The housing shortage in the Netherlands has risen to more than 400,000 homes. This shortage mainly affects tenants and buyers in urban areas where affordable homes are scarce. Although the cabinet has promised to build 100,000 new homes a year, production is lagging behind this target. This is due to long lead times for construction projects, permit problems and the lack of building land. We have pointed out before that the problem is that so many social and mid-rent homes have to be built per project. In actual fact, these homes aren't profitable. As a result, the loss has to be absorbed by expensive rental homes or expensive owner-occupied homes. But that way you can price yourself out of the market. If it gets too expensive, it won't be sold or let. And yes, it's true that the rest is let immediately. Of course, the demand is huge. But the problem is that other homes have to pay for these cheap homes. Only if that percentage of ‘affordable’ homes can come down can the other homes become more affordable and more of them be built.
1. The reality of the housing market
The Netherlands is currently facing a housing shortage of well over 400,000 homes, a shortage that mainly affects tenants and buyers in urban areas. Despite the cabinet's promise to build 100,000 homes a year, construction output is lagging behind. The problems range from long lead times for permits to a shortage of building land. In cities such as Utrecht, where the average house price has now risen to €490,000, it is almost impossible for first-time buyers and middle-income earners to find affordable homes. The Schoof cabinet promises improvement, but so far it hasn't got beyond words, while the actual solutions, such as faster procedures and better building locations, fail to materialise.
Affordable
The term ‘affordable’ seems simple, but it certainly isn't. For first-time buyers and middle-income earners, it often means they shouldn't spend more than 30% of their monthly income on housing costs. For rental homes, this would mean a rent below €800 a month for someone on an average income. For owner-occupied homes, it means prices have to stay below €300,000. But with construction costs that have now risen to €5,000 per m², it's a challenge to build affordable homes without subsidies or far-reaching tax measures. This is simply no longer achievable. It costs €5,000, and that's before any return has been made. No developer is going to take a risk without a reward. We all sometimes forget that the housing market doesn't consist only of first-time buyers and young families. Many families who got on the ladder earlier have enormous home equity and very low monthly costs. We all have to start somewhere and work our way up. We also sometimes forget that not everyone has an average income. Our clients are mostly first-time buyers with a very good income. They can afford the average house price in Utrecht.
How many homes do we need in Utrecht?
The housing need in Utrecht is considerable. There are some 16,000 to 17,000 active house hunters in the city, while only 1,157 homes are for sale. To ease the pressure on the market, at least 15,000 to 20,000 homes need to be built over the next five years. But the reality is that construction isn't keeping up this pace, partly because of slow permit processes and a lack of building land. Over the past 24 years, around 19,000 homes have been added in the city. This means we'd have to build as many in 5 years as in the past 24 years. That's an impossible task.
The percentage of social housing and the demand for it
At present, around 32% of Utrecht's housing stock consists of social rented housing. However, this isn't enough to meet the growing demand for affordable housing. Many people who are entitled to social housing can't find an available home. On top of that, there are an estimated large number of scheefwoners – people living in social rented homes while their income is too high – which increases the scarcity even further. You might say: so what? The scheefwoner pays their rent. But that's not true. At the moment we can't build more affordable rental homes, simply because it's too expensive. In fact, the rent someone pays for a social rented home in the big cities barely covers the costs.
Housing associations are struggling financially because of limited rent increases in the social rented sector, while their costs keep rising. According to Johan Conijn, rents would have to rise by 50% to cover the costs, since associations now depend on future income to make ends meet. At the same time, landlords are faced with higher costs, while regulations force them to lower rents. This lack of resources is holding back investment in new construction and sustainability improvements, so the housing shortage persists. Although house sharing and splitting homes offer possible solutions, they don't solve the problem structurally. Without higher rental income and investment, the pressure on the associations and the housing market will keep increasing
What is the effect of uitponden and the Wet betaalbare huur?
Uitponden – selling rental homes to private buyers – has a big impact on the rental market. It shifts supply towards owner-occupied homes, leaving fewer rental homes available. Rents are rising enormously. In fact, all that's left is social housing, which is too cheap to cover its costs, and very expensive rentals.
The Wet betaalbare huur (Affordable Rent Act) aims to regulate rents and protect tenants. However, this creates uncertainty among investors, who are less inclined to invest in new rental projects. Investors fear the law will limit their returns, which could lead to less new construction and a further tightening of the rental market. And a small return isn't a problem. But there are now many landlords who have to top up every month. I know a lot of people shout, ‘Yes, but they earned a lot for years’. ‘The investors feel sorry for themselves’. The investors don't feel sorry for themselves. They sell and cash in. But they do see what an enormous effect this has on people's lives. But be honest. Would you keep working 40 hours or more a week if, well, you had to pay for the privilege? Or if your income were halved? Most people wouldn't. They also don't realise that you run a lot of risk with property.
What is the effect of renting out rooms instead of regular letting?
Another phenomenon affecting the housing market is the conversion of homes into rooms for rent. Houses are split into several rooms because landlords can achieve a higher return that way. This comes at the expense of self-contained homes for first-time buyers and families. That's the opinion of the Woonbond. Of course, nobody likes living next to students. We'd all like to live in a nice house in a quiet spot close to the city. But precisely by applying all these measures, fewer and fewer people end up living in each house. That way we make even poorer use of our square metres. And that while in the Netherlands we already live on more square metres than anywhere else in Europe.
2. Policy challenges: the coalition agreement and the Wet betaalbare huur
Although tackling the housing crisis ought to be a top priority for the cabinet, implementation remains slow. The Wet betaalbare huur, which caps rents in the regulated sector, remains in place, despite investors' hopes of reform. This policy creates uncertainty among property investors, who increasingly wonder whether it's still profitable to invest in rental homes. There's a huge group of investors selling their properties and going to invest abroad.
On top of that, there's a persistent shortage of building land. Although Hugo de Jonge's regiewet (the act giving central government more control over house building) was supposed to make large-scale building locations enforceable, concrete answers on how and where this act will take effect are still lacking. I find it really painful that a minister of Housing can halt an entire construction project and even get paid a fortune for it. If everyone is allowed to keep on litigating, not a single house gets added. We all want affordable housing, but not in my backyard.
3. The impact of the postponed box 3 system
Another point of uncertainty is the delay in introducing the new box 3 system. This system, which would tax investors on the basis of their actual return instead of a notional return, has been postponed until at least 2027. As a result, investors will have to deal with the current, unfavourable tax regime for the time being. According to tax specialist Luc van Dijk, this is leading to more rental homes being sold off. Many investors choose to sell their property as soon as tenants leave, which increases the supply of owner-occupied homes in the short term but puts even more pressure on the rental market. What we mainly see is that these homes were often let for between €1,000 and €1,500 a month. In a sale, however, they often fetch around €425,000 or more. That's €1,897 gross per month. Many houses are also sold for much higher amounts. So it's precisely the mid-rent group that loses out. They can no longer buy and can no longer rent. Usually even fewer people then end up living in a home like that.
4. Solutions to the housing crisis
Various solutions to the housing crisis have been discussed, but quick breakthroughs are not forthcoming:
- Easing the rules for new construction: Maarten de Gruyter stresses that faster processes for construction projects are essential to replenish the housing stock
- Investment in student housing: The shortage of student rooms, estimated at 22,000, can be solved through targeted subsidies and partnerships with universities. But also by relaxing the rules on house sharing.
- Uitponden and the consequences for the rental market: Investors selling off rental homes because of the high tax burden will make the situation on the rental market even worse. Letting has to pay again. That means the tax burden should come down or rents should go up.
- Lack of building land: The cabinet must make concrete agreements with provinces and municipalities to give house building priority over other spatial uses, such as energy projects. But it should also make it easier to convert existing buildings.
5. Criticism of the cabinet's policy
Sander van der Ploeg of Vastgoedmarkt is critical of the cabinet's coalition agreement. Despite the promise to treat house building as a top priority, concrete measures fail to materialise. The increased transfer tax and the lack of clarity around the new box 3 system are adding to the pressure on landlords, who are already facing rising costs for maintenance and sustainability improvements. These tax measures reduce the willingness to invest in new homes. But the uncertainty about rents and rising construction costs, plus costs such as ground lease and WOZ (the municipal property valuation), also make investing in new homes too uncertain.
What does ChatGPT think?
I had ChatGPT analyse the Brainbay figures for Amsterdam, Rotterdam, Utrecht and The Hague on housing stock & population, and asked whether it could draw a conclusion from these figures and which homes should be built based on them. This was the answer: The figures show that there is a structural shortage of homes, especially for smaller households and young first-time buyers. At the same time, we see rising home values, making affordability an increasingly big problem. To tackle the housing shortage effectively and bring the housing market into balance, it is crucial to take the following measures:
- Focus on affordable apartments and studios in urban areas such as Amsterdam and Rotterdam, where the pressure on the housing market is greatest.
- Increase the construction of owner-occupied homes in the mid-market segment, to give first-time buyers and middle-income earners a chance to enter the market.
- More efficient use of the existing housing stock in cities such as ‘s-Gravenhage (The Hague) by tackling vacancy and redeveloping existing buildings.
- Multi-family housing and high-rise remain necessary in densely populated urban areas, while cities such as Utrecht can offer more room for single-family homes that better suit families.
Solving the housing crisis requires targeted house-building strategies that match demographic developments and housing preferences.
In the Netherlands we're also simply spoilt. First-time buyers want a spacious home too. We can't force anyone to live in a chicken coop. But building houses is simply expensive, there are lots of rules, and the costs of our welfare state are going through the roof. Together, we'd need an awful lot of public money if everyone is to have affordable housing.
Settle for a slightly smaller home. Develop yourself, work incredibly hard and keep moving up a little at a time. And yes, I know it's easier said than done. I lived in a studio of 15 m2. I showered in a cupboard in an old little house. But I was always so proud. And even when I was seriously ill, with no right to benefits, I always kept going. If you only look at what's fair and affordable, you won't get anywhere. Take your cue from successful people and always look for the opportunity. Maybe the bigger home you'd love is actually within reach for you in Zeeland. And would you really like to live in Utrecht or Amsterdam? Then that might mean the two of you living in 40 m2 for years. That's perfectly normal in other countries. Just like living together with the whole family.
Conclusion
The housing crisis is a complex problem that can't be solved with a single measure. The solutions lie in a combination of measures: speeding up building procedures, more social rented homes, and targeted tax reforms. In addition, more attention needs to be paid to tackling scheefwonen and preserving the existing housing stock. Are you in two minds about whether to buy a house in this uncertain market? I say do it. Because with this wishy-washy policy, the problem will only get bigger in the coming period. Interest rates are falling, which improves affordability, but also leads to higher prices. Buy now and benefit from falling interest rates. And in a few years you'll be glad you got in when you did. Looking for a nice house? Take a look at our listings.
