There is a serious housing shortage in the Netherlands and this is one of the most important issues in the upcoming House of Representatives elections. Almost all groups are of the opinion that more new housing should be built quickly.
Of course, the very few 390,000 homes don’t just exist. Experts look at four topics to examine what a new government could do to boost housing construction.
Problem 1: Long waiting lists for too few social housing units
Several experts say companies need to have more money to build more. For this purpose, corporate taxes for companies may be abolished. “The Netherlands is almost the only country in Europe that pays taxes to clubs that build cheap rental apartments. In other countries they get subsidies, so it’s a strange story,” says Frank Wassenberg of the Platform31 knowledge network.
Taxes for businesses have already been reduced this year, as the homeowners tax introduced in 2013 has now been abolished. As a result, companies save approximately 1.7 billion euros per year. They will save another $1.1 billion by eliminating corporate taxes.
“Corporate tax has been a pain in the ass for companies for some time,” says Berry Blijie of research institute ABF Research. “It’s also a little strange that nonprofits can’t do their job properly because of a tax like this.” Peter Boelhouwer, housing market professor at TU Delft, agrees: “Give companies more financial leeway.”
Problem 2: Landowners are waiting
Some experts say that due to the decline in the new construction market, landowners are waiting for better times when they can get more money for their land. Do you think something can be done about this? “For example, introducing a tax on undeveloped land,” says Madeline Buijs, economist at property consultancy Colliers. “Then it becomes more attractive to not wait to build.”
Stefan Groot, housing market economist at Rabobank, also considers real estate measures such as the planning advantage tax, which is a tax on value increases in the conversion of real estate. “You don’t just promote it. But if you announce this now, property owners will know that the return on their properties will decrease in the future and they will be more inclined to continue building housing.”
Issue 3: Lack of clarity on rental properties for investors
Then the private rental sector. According to ING commercial real estate economist Mirjam Bani, investors and developers are now waiting, in part due to uncertainty over whether Minister De Jonge’s maximum rent plans will be implemented. The Senate and the new House of Representatives still need to vote on the issue after the election.
“It is now difficult for investors to calculate how much rent their house will bring.” That’s why he says there is a need for clarity here. He believes the plans do not make it easier for investors to build more homes. “Investors are already facing significantly higher interest rates, which does not help solve the housing shortage.”
“Get certainty on this as quickly as possible,” says ABN Amro construction economist Paul Bisschop. “Uncertainty is one reason why foreign investors are investing less in rental apartment construction.”
Problem 4: New construction is (too) expensive
New buildings are generally more expensive than existing buildings. Therefore, there are calls to reduce VAT on new buildings, making these homes cheaper and therefore more attractive to buyers.
“This is not the best option because with the VAT reduction the incentive for expensive houses is higher than for cheaper ones,” says Stefan Groot from Rabobank. VAT on a new home is now 21 percent. Groot sees something in a fixed temporary subsidy of, say, tens of thousands of euros for all newly built homes.
Professor Boelhouwer is considering a fund of 3 to 5 billion euros per year to promote housing construction. “This can be done, for example, by building infrastructure where habitat will be created.” Such projects are easier to calculate for municipalities and project developers.
Various experts believe that it is necessary to ensure that state funds for construction financing are given to land owners as additional profits. “The market now needs to accept its losses,” says ABN Amro economist Bisschop. “It’s a dilemma,” Groot says. “The more money the government provides, the better the construction stays. But fewer owners will accept losses and adjust plans. Land prices also need to fall.”
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
