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Property developers and investors should start looking at the Netherlands’ housing crisis from the perspective of the people looking for homes, housing minister Hugo de Jonge told visitors to the Provada real estate trade fair earlier this month.
“Everyone knows someone who is unable to find a place to live,” De Jonge said at the opening of the 19th edition of the Amsterdam-based fair, where he met developers and investors and discussed his target to build 900,000 new homes.
The real estate industry has been highly critical of some of the measures the minister has proposed to stimulate the development of more affordable housing, such as setting quotas for different types of property in new developments.

Ambition
The 900,000 figure has not been plucked out of thin air “by an over-ambitious minister” but is based on the real needs of a growing population, De Jonge said.
Despite industry criticism, the decision to extend rent controls and boost the supply of affordable housing will not be abandoned, he said, despite admitting earlier in the month that the sector is going through a dip as new construction slows.
Asked by one delegate if he had to choose between 900,000 new homes and extending rent controls to more properties, De Jonge said: “Not a good question. We have to do both.”

Subsidies
The government is also doing more to help people starting on the housing ladder to buy a home, by introducing starter subsidies and other measures, he said.
In addition, the person looking to buy a home is being disadvantaged by the endless legal procedures before building work starts and this too needs to be tackled, De Jonge said. The minister has already announced plans to slash the number of times locals can take legal action against a development.
“We have to work together,” the minister said. “Government and industry are not on opposite sides… and we are facing a gigantic task.”

The Dutch government has signed agreements with six more of the country’s 12 provinces, outlining where new housing is to be built in the coming years.

Flevoland, Noord-Holland, Utrecht, Noord-Brabant, Limburg and Gelderland have joined the list of regions which have committed to facilitating new residential developments, as part of the government’s target of building 900,000 new homes by 2030.

The deal covering the Amsterdam Metropolitan Area, for example, is for 171,000 new houses and apartments – or almost a fifth of the government’s total ambitions. In Utrecht, the deal is for 83,000 properties spread across the province.

Bottlenecks

The agreements highlight areas where large scale residential construction can be built in return for the government’s commitment to speed up the development process.

‘We are asking the government to fully commit to solving these bottlenecks, where the state has a role,’ said Haarlem housing chief Floor Rodune, who also chairs the MRA housing committee. ‘That be done by rule changes or by providing extra financial resources.’

Housing minister Hugo de Jonge has already pledged to remove the bottlenecks to housing construction such as restrictions relating to nitrogen-based pollution, mobility, the shortage of electricity grid capacity and local objections.

Problems

However, the construction trade economic institute EIB warned earlier in March that eight of the 12 provinces will have to speed up their residential development plans if the government is to meet its target of 100,000 new homes a year.

In particular, Zuid and Noord-Holland, Utrecht and Gelderland need to do more, the EIB said. The five big Holland Metropole cities are located in these four provinces.

By contrast, the more rural provinces actually built more houses than needed to meet government targets. This, the EIB said, maybe due to the pledge to ensure two-thirds of all new homes are classed as affordable – either rent controlled or owner-occupied.

It is more complicated and expensive to build affordable homes in the central urban belt of the Netherlands known as the Randstad, than in rural areas, the agency said.

Elections

The impact of the recent provincial elections on the government’s housing plans remains to be seen. Work has now started on forming 12 new provincial councils, all of which are likely to include new party BBB, which supports high rise developments in urban areas rather than in green belt land. The pro-farmer BBB was the big winner in the March 15 vote.

Dutch housing minister Hugo de Jonge has published draft legislation which gives central government more control over allocating building land and to force local authorities to act if they fail to reach agreements.

The new law also seeks to ensure two-thirds of new housing is classed as affordable – either rent controlled, mid-market rentals (up to around €1,100 per month) or for sale at affordable prices.

The proposal is one of a package of measures aimed at giving central government more say in residential property development, in an effort to ensure that 900,000 new homes are built by 2030, in line with the government’s plans.

‘For too long we thought that local decisions would automatically provide a solution to the housing shortage but that is not the case,’ De Jonge said. ‘That is why we must restore public housing and take back control. This legislation will make sure governments have the right tools to manage how much, where and for whom we build.’

Red tape

De Jonge has already published plans to speed up the construction of new housing, partly by limiting the right of appeal against new developments. It currently takes an average of 10 years from the start of the process to completion but this can be speeded up by removing red tape and combining processes, De Jonge said.

In particular the minister plans to limit the right of appeal against a building project to one legal layer. At the moment, locals who object to the plans can go to court several times in their efforts to stop a development.

De Jonge also says more phases in the development process – from planning, sorting the finances, research, consultation with locals and legal procedures – should take place concurrently. This, the minister said, can cut the development process before construction starts by years.

Fewer permits

Figures show that it is becoming more difficult to sell newly built housing and that the number of building permits handed out by local authorities has also gone down. Last year, permits for 60,000 houses were extended by the end of November, compared with 76,000 in 2021 as a whole.

Insurers have also reported a 20% drop in projects. Construction often only starts with 70% of a project is sold and this is leading to further delays or changes to number and type of home.

‘Based on what we know now, it looks as if we are going to end up with 50,000 to 60,000 new homes this year,’ Gerlof Muntinga, financial director of Woningborg, told the Financieele Dagblad earlier in February.

De Jonge has said he is prepared to consider some form of financial guarantee for construction companies if they start building sooner and has promised to come up with an analysis before the summer, the FD said.  However, any move using taxpayers’ cash will have to be cleared by Brussels to make sure it is not illegal state support.

Meanwhile, De Jonge has said he hopes the new legislation will become law at the beginning of 2024.

Over 74,000 new homes were completed in the Netherlands last year, the highest figure in 10 years, but still far below the government’s target of 100,000.

The number of completions was particularly high in Zuid-Holland province and in Amsterdam, according to new figures from national statistics agency CBS.

In Amsterdam, 6,800 new homes were added to the housing stock, taking the total up by 1.5% to 475,000. In the other big four cities, around 2,000 new homes were completed.

In Zuid-Holland, which includes the Holland Metropole partner cities of The Hague and Rotterdam, 14,500 new homes came on the market.

10% decline

The figures coincide with the publication of a new report by the construction industry’s economic institute EIB, which suggests up to 10% fewer houses will be built in the next two years, despite the government’s pledge to add 900,000 to the national housing stock by 2030.

In addition, the number of permits for new projects is also down, which will have an impact later in the decade.

In particular, the cost of building materials and high interest rates are having an impact on developers’ willingness to invest and legal requirements stemming from nitrogen-based pollution caused by construction are also slowing down processes, the institute said.

Nimby

In January, housing minister Hugo de Jonge published plans to make it quicker to build new housing, partly by limiting the right of appeal against new developments.

It currently takes an average of 10 years from the start of the process to completion but this can be speeded up by removing red tape and combining processes, De Jonge said.

‘We want to break through the ‘not in my backyard’ sentiment,’ he said. ‘We owe it to everyone looking for a place to live to do everything in our power to speed up housing construction.’

Dutch housing minister Hugo de Jonge has reached agreement with all 12 provincial councils on plans to develop new housing over the coming eight years, but developers have described the programme as ‘unrealistic’. 

In total, the Netherland’s 12 provinces have committed to building over 900,000 new homes, of which two-thirds will be classed as affordable, the minister told parliament earlier this month. ‘We are faced with the enormous task of building a total of 900,000 homes in the coming years,’ De Jonge said. ‘This requires a joint effort from governments, corporations and the private sector.’ 

Most of the new homes will be built in the provinces where the five big Holland Metropole cities are – Amsterdam, The Hague, Rotterdam, Utrecht and Eindhoven. Provincial and local councils will firm up the plans in localised agreements in the coming months, including ‘the specific locations, target groups, rental/purchase distribution and price categories,’ De Jonge said. ‘With this approach, we are taking back control of public housing.’

The government defines affordable housing as property with an official rental value of up to €1,000 per month or a purchase price below the national mortgage guarantee ceiling, which is currently €355,000. 

Investors have already warned that the government’s plan to regulate most of the rental market in the Netherlands will reduce rather than increase supply. And developers now say that the 900,000-home project will not achieve its aims without more involvement from the private sector either.  

Construction sector lobby group Bouwend Nederland said in a reaction that it had many questions about the De Jonge’s plan, pointing out that most of the planned developments are still up in the air, thanks to nitrogen and noise norms. 

‘It is a great ambition… but there are many hurdles to take to make it a reality,’ said director Fries Heinis. ‘Some of the plans are concrete in the short term… but the government must involve the private sector far more than it has done so far.’

 Dutch developers association Neprom described the plans as ‘unrealistic’, saying that the number of housing units is partly based on ‘plans for projects in which the housing will not be completed until well after 2030.’

Neprom chairwoman Desirée Uitzetter said that building homes is becoming increasingly expensive, partly due to the impact of the Ukraine crisis. The 900,000 figure, she said, is ‘not based on really concrete projects, but on ideas about projects.’

‘In our view the private sector has not been involved enough in making these projects concrete and achievable,’ she said. ‘That is where the pain is.’

Meanwhile, research by the construction sector’s economic institute Economisch Instituut van de Bouw suggests the housing crisis would be solved if every town or village added one or two streets of homes to its housing stock. 

Small scale projects in villages and towns have the potential to add 300,000 homes to the city’s housing stock, the EIB said in a new report. In Noord Holland province, for example, where 184,000 homes will be built under De Jonge’s programme, 200,000 additional homes could be built if every town added a street, the EIB said.

Many of the projects in De Jonge’s list are ‘large, complex inner city locations, which will first need infrastructure and area-based transformation,’ EIB director Taco van Hoek said. ‘It will take years to draw up the plans, realise the infrastructure, remove existing buildings, move industry and clean up the soil,’ he said.

Dutch housing minister Hugo de Jonge’s plans to reform the rental housing market include a new upper limit for placing rent controls on property at around €1,000 per month.

De Jonge said this spring that he would regulate the rents of more of the country’s housing stock in order to ‘reduce excesses’ in the market and that he was thinking of an upper limit of between €1,000 and €1,250.

At the moment, landlords have free choice in deciding the rent of property worth more than 143 points in the regulatory system. Points are awarded for amenities such as the number of bedrooms, whether or not the apartment has luxury bathroom fittings and the age of the property. 

The point total will now be increased to 187, which means nearly all rental property will be subject to some form of price control – as yet, it is not clear exactly how much. Just 9% of Dutch housing stock is currently available to rent to people earning more than €40,000 a year.

Criticism

News of the extension of rent controls was heavily criticized by developers and investors at the time – partly because of the lack of clarity and partly because it would make some developments unprofitable. 

Dutch real estate investors wrote to De Jonge warning that new home construction projects will slow drastically if he presses ahead with plans to regulate more rents. Without change, just 50,000 new homes will be built every year, rather than the 100,000 that the government is counting on, lobby group Neprom told the minister in July.

Higher wages and the cost of materials are also having an impact, with a 9% drop in the number of new rental properties coming on the market last year. 

Rents are rising

Figures published by rental housing platform Pararius in October show that rents in the non-rent controlled housing sector in the Netherlands have risen sharply in the five big cities, and properties are let more quickly. 

In Amsterdam, tenants with new contracts are paying 10.3% more than they did a year ago, with rents reaching €25.24 per square metre, or an average of €1,766 for a 70 square metre apartment. 

In Utrecht, new contract rents were up 6.5% to €20.33 per square metre – or €1420 for a 70 square metre flat. In Rotterdam, The Hague and Eindhoven, rents for new contracts now average between €17 and €18 per square metre, Pararius said.

Owner occupied sector

Meanwhile, figures from real estate agents’ association NVM indicate that the average house sold for 5.8% less in the last financial quarter than between April and June. The Q3 results are the first solid indication that the Dutch property market is taking a downturn, after years of strong growth. 

Rising interest rates in particular are reducing the amount would-be buyers can borrow. The government is also introducing tougher borrowing requirements for home buyers next year.  

De Jonge will publish his detailed plans for reforming the rental housing sector in November.