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.

In total, 34 Dutch cities, companies and organisations make up the 2022 Holland Metropole delegation to Expo Real in October. Together, they are showcasing how Dutch developers, investors and local authorities are putting the circular economy, climate adaptation, sustainability and social cohesion high on their priority lists.

This summer’s drought and last year’s floods have brought home how important it is to tackle climate change and adapt urban environment to future needs – particularly in a low-lying country like the Netherlands.  And there is growing awareness throughout the country that the big problems facing it – carbon emissions, nitrogen-based pollution, water shortages and surpluses, the energy transition and a shortage of homes – are all connected in some way, and that working together is a key part in solving them.

Investor Bouwinvest, for example, is supporting the Red & Blue research project, a five year programme backed by the government, universities and private sector, which aims to establish ways to make the built environment climate adaptive. But the company is also active in its own right.

‘The  effects of climate change are part of our risk models, We include climate adaptation programmes in our portfolios and we have added these climate risks into our investment decision-making process,’ says CEO Mark Siezen.

The Holland Metropole alliance, first launched almost 10 years ago, aims to promote public private partnerships at a metropolitan regional level, making sure the issues facing urban areas are put on the agenda and that there is enough executive and investment power to make real change.

‘We are creating a city in which heavy rainfall does not damage our homes and roads, in which you can find a cool place to sit on hot days and in which greenery survives drought,’ says Rik Thijs, Eindhoven’s climate alderman.  ‘Climate adaptation is not just about technical solutions, but about making Eindhoven a better place to live and work.’

The Netherlands has drawn up a list of targets for reducing greenhouse gases and eradicating natural gas as a source for heating and cooking in homes. On a national basis, the government has pledged to cut greenhouse gas emissions by 49% in 2030 compared with 1990.

Developers and investors too are setting their own standards. Investor a.s.r. real estate works with strategic targets to ensure its portfolio is climate adaptive, taking four major climate risks into account: heat, flooding, drought and extreme weather

Ballast Nedam reduced the CO2 emissions of its owner occupier homes by an average of 69% last year, while Syntrus Achmea has cut the CO2 emissions of its residential portfolio by 40% compared with 1990. Others are working on innovative techniques.

‘As a family business we feel responsible for future generations, so we have opened a circular construction hub called Urban Miner. We focus on timber construction, invest in emission-free equipment and develop energy neutral buildings,’ said a spokesman for Dura Vermeer.

Architects bureau UNStudio, is developing new design strategies for adaptive reuse, transformation and extending building lifespan including smart, low-carbon and energy-producing building innovations.

Developers too are investing in new techniques and materials. While timber has now become the new standard, Ballast Nedam has branched further out and is using straw, a residual product from farming, as a construction material in its new ‘Nature Houses’ – with construction due to start in 2023. By using prefabricated straw panels, the company says it is able to build on a large scale and the resulting home is 95% biobased.

MRP has also turned to prefabrication. ‘We focus on modular building techniques and this means we can produce homes more efficiently and economically,’ said Bart Meijer CEO at MRP. ’This benefits both the planet and the consumer.’

To find out more about what the Holland Metropole partners are showcasing at Expo Real, visit A2.130.

The Netherlands needs to increase taxes on home owners and boost the private sector supply of new homes in order to get the housing market moving again, according to the chief economists from the three biggest Dutch banks, and two professors of finance policy.

Writing in economists journal ESB, the authors argue that the government’s current strategy is based on ‘papering over cracks’ rather than boosting access to the housing market, reducing inequality between tenants and home owners, and tackling prices.

In particular, the government should focus on expanding the supply of affordable housing which falls outside the rent-controlled sector – which has a ceiling of €763 per month – and which is not owned by housing corporations.

They also suggest that local authorities and their residents benefit more from new construction by introducing a tax on the increase in the value of the land which takes place when zoning plans are changed.

This tax, payable by developers, would allow municipalities to finance social goals – such as more social housing – more directly than by setting quotas in development projects. This, they say, will make it easier for municipalities and project developers to negotiate with each other about land availability and sales.

In addition, more housing should be encouraged in areas where prices have risen the most in the past few years, because this is an indicator of future demand.

At the same time, the economists say more should be done to make sure the current housing stock is used efficiently. In particular, various regulations which ban home sharing by more than two adults who are not related should be overhauled, because this can ease the shortage of places to live in the short term.

They also propose making building requirements more uniform, in order to speed up the construction process itself.

Some aspects of the government’s current strategy, such as the plan to regulate the rent of a much bigger proportion of the rental housing stock, is not without risk they argue. ‘It may improve affordability in the short term, but it will not tackle the structural shortfall in affordable rental housing,’ they state.

Another area of concern is the fact that home owners pay relatively little tax, which is why the Dutch are keen to put so much borrowed money into bricks and mortar, the economists say.

This could be partially tackled by treating property as an asset to be taxed when the home is sold. To stop people borrowing beyond their means, which is also putting up house prices, the official recommendations on borrowing – currently 100% of the value of the property – should not be expanded and could even be reduced. Energy costs should also be taken into account in determining how much people can borrow.

‘These reforms are a break with the past and that is why they should be introduced gradually,’ the economists say. ‘But they offer long-term advantages. Home owners and tenants will be treated more equally, house prices will become more stable and the tax on work and other income will come down, so that households can spend more on other things beside their living costs.’

The article was written by Ester Barendregt (Rabobank),  Marieke Blom (ING) and Sandra Phlippen (ABN Amro) together with Arnoud Boot, professor of Corporate Finance and Financial Markets at the University of Amsterdam and Dirk Schoenmaker, professor of Banking and Finance at Erasmus University, Rotterdam.

Developing climate proof property is the key issue for Holland Metropole partners at the Provada real estate conference in Amsterdam, which takes starts on June 14.  

With climate change becoming ever more acute, and the Dutch government unveiling new measures to boost the energy efficiency of the country’s housing stock, Holland Metropole members will be showcasing their commitment to tackling environmental problems during the three-day Provada real estate event.

The theme of this year’s Provada is ‘Act now for a better tomorrow’ with a particular focus on climate adaptation and circularity. Several Holland Metropole partners, including Dick Boelen, director of Dura Vermeer and BPD’s Desirée Uitzetter who is also head of Dutch developers’ association NEPROM, will be outlining their views on the big issues during the conference programme.

This year the Holland Metropole partners again have a particular focus on timber-based construction. ‘Climate change is the biggest challenge of our generation,’ says architects practice MVSA. ‘We believe we must take responsibility, and using wood, which is a sustainable construction material, helps us to do this.’

In the Amsterdam Metropolitan Area, for example, developers, investors and local authorities last year signed a new Timber Green Deal, based on a real commitment to the use of wood.

‘Awareness has grown across everyone involved in the real estate and development sector that building with timber on a large scale is essential if we want to meet the terms of the Paris climate agreement and speed up the supply of housing,’ says Bob van der Zande, programme director Houtbouw MRA.

Timber based construction is environment friendly as well. Experts have calculated that if the one million new homes which the Dutch government wants to see built by 2030 are made primarily from wood rather than concrete, it would save 50 megatons of carbon dioxide emissions.

‘The built environment accounts for 40% of global carbon emissions. By using more natural construction materials instead of concrete and steel, and focusing more on circularity, the CO2 emissions driven by new construction can be minimized,’ points out Ingrid Hulshoff, portfolio manager real estate at investor Syntrus Achmea.

Existing property is also being brought up to new standards. Investor Bouwinvest, for example, has improved the energy label of the World Trade Centre in Rotterdam from E to A in three years and has made societal returns a key part of its performance targets.

In Rotterdam, built around a major river delta, the role of climate change and the transition towards green energy are central themes across all planning decisions.  In particular, city officials are looking upwards, to18 square kilometres of city roofs, which are being turned into gardens, water buffers and more.

This year, throughout June, intrepid visitors can even walk across a 600 metres rooftop walk built on scaffolding to find out more about what is being done. ‘We have almost 170,000 m² of solar panels; we have 360,000 m² of green on rooftops, but that’s still [just] 3% of the potential of that 18km² that we have,’ organiser Leon van Geest told DutchNews.nl. ‘We still have a lot of work to do.’

Check out the Holland Metropole partner stands

Find out which Holland Metropole partner experts are speaking and where

The number of new rental properties added to Dutch housing stock fell 9% last year, when compared with 2020, as the mounting cost of workers and material lead developers to delay projects, ABN Amro said in a new analysis of the Netherlands’ housing market.

While most new rental homes were realised in Amsterdam, the total in the capital was just 2,965, and in Utrecht, only 676 new rental properties came on the market, the survey showed. In the Netherlands as a whole, almost 23,000 new rental properties were added to the supply side.

ABN Amro analyst Casper Wolf says there is a link between the situation in the five Holland Metropole cities and smaller urban conurbations, where the amount of new housing is increasing more rapidly.

‘Rijswijk, Zoeterwoude and Dordrecht all show considerable increases in the amount of new rental property,’ he said. ‘Nieuwegein has become the alternative for people who cannot afford Utrecht.’

Skilled workers

Developers, who have been faced with delays and cancelled projects because of efforts to reduce nitrogen-based pollution, are now counting other costs as well, Wolf said. It has become more difficult and expensive to find skilled workers, building material has become more expensive and land prices are also going up.

‘The price of land rose to a record €530 per square metre in the first months of 2022,’ Wolf said. ‘That is up 9.5% on a year ago.’

Government measures, such as the increase in the property transfer tax for investors, are also making developers more reluctant to take the plunge, Wolf said. ‘Government policies that intervene in the housing market plus renewed competition from Airbnb is making investing and renting out in the non rent-controlled sector less attractive, or sometimes even impossible.’

Ownership restrictions

Other measures to help local councils boost the supply of affordable homes are also having an impact. Local authorities are now allowed to designate new developments as ‘owner occupier only’ and Arnhem, for example, has introduced this for properties valued at up to €325,000 in 20 of its 24 residential areas.

Rotterdam has introduced similar regulations in 16 residential areas, with a limit of €355,000.

‘This measure is advantageous to first time buyers but is a problem for people looking to rent in the free sector because investors are staying away,’ Wolf said. Investors are no longer competing with private buyers for cheaper property but this is resulting in fewer rental properties for people who cannot get a mortgage but who earn too much to rent social housing, he said.

All this, says Wolf, means rental prices are likely to rise still further in the short term.

‘If the government’s ambitions to build 100,000 homes a year are achieved, this will probably reduce the pressure on the free sector in the longer term,’ he says.

Rental increases

Last year, landlords operating in the non rent-controlled sector agreed to limit rent rises to the rate of inflation from the previous year plus 1%. This means rents are likely to rise 3.3% this year but could be significantly higher in 2023, because of the current high rate of inflation, the ABN Amro report showed.

However, housing minister Hugo de Jonge said in April that this strategy could lead to problems for tenants, given the soaring rate of inflation, especially when coupled with higher energy bills.

Instead the minister plans to set a maximum increase for so-called free sector rents – properties which are more expensive than the €763 per month social housing sector limit. He already has this right for social housing.

The government has pledged to increase the number of properties for rent outside the social housing sector, particularly mid-market rentals of up to €1,000 per month. Currently, 57% of the Dutch housing stock is owner occupied, 33% is rent controlled and just 9% is available for higher earners who wish to rent.

The Dutch government’s chief architect has said that hundreds of thousands of new homes can be built in Dutch towns and cities by boosting the density of developments, rather than expanding into green belt land.

Francesco Veenstra told the Telegraaf in an interview that many urban areas still have land available and that developing brownfield sites will ‘also improve the living environment, and keep the local baker and butcher in business’.

The Dutch government has set a target of building one million new homes by 2030 and many of them will be built in large new residential developments outside city centres.

‘Of course you also have to build new neighbourhoods, but you can also build and renovate in existing urban environments,’ Veenstra told the paper. The architect will have a key role in advising housing minister Hugo de Jonge as he puts his plans into action.

Shrinking households

One reason for the current shortage of homes is the fact that households are shrinking, even though the population is expanding. ‘At the beginning of the last century the average household was made up of five people and at the moment it is 2.1,’ Veenstra points out. ‘This means that more than twice as many homes are needed for the same number of people and this is a problem that will only get worse.’

The 2008 financial crisis was another problem because many building firms went bust at that time and the construction of new residential property almost halved. Today, the shortage of workers is a major issue, and the government has said prefabrication is likely to have a role in solving the current crisis.

Veenstra said he is hopeful that the building process can be made faster. ‘But we need to act on a wide front,’ he said. ‘We need to produce many different types of homes, using quality prefabrication and good craftsmen. We must also repurpose existing real estate such as office buildings, old school buildings and factories.’

Infrastructure

The government advisor also warned about repeating the problems of earlier mass residential building programmes, in which the infrastructure was dealt with as an afterthought. ‘I believe in densification of city districts,’ he said. ‘Over the past fifteen years, we have been able to realize a quarter of a million homes without impacting on green areas. It is a process that we must continue, because there is still a lot of space in our cities and towns.’

The Netherlands, he said, is still far from full. ‘There is plenty of room, but it is just in different places to where people are looking now,’ he said. The border region around Delfzijl in Groningen and Maastricht or Vlissingen have plenty of opportunity for development, as long as the jobs and the transport infrastructure is there, Veenstra said.

‘If we make plans to build outside the main urban conurbations, we will have to make sure there are jobs,’ he said. ‘And we might also have to travel a little longer between home and work.’

The new Dutch government plans to build 100,000 new homes a year – taking the total by 2030 to around one million. But where does the figure come from? The NRC newspaper has been finding out.

The NRC says the ‘one million’ figure was first mentioned in 2017 by a Delft research bureau which has for years analysed the housing market on behalf of the government. It was later used by the Holland Metropole group as an alarm call, to alert ministers to the growing problems on the housing market and the need to develop a coordinated approach to the problem.

Despite the warnings from developers little changed, and ABF Research said again in late 2021 that 936,000 new homes would be needed by 2030. At the moment, the Netherlands needs 279,000 new homes to meet demand, ABF said. That figure is based on waiting lists, the number of young adults sharing homes, students living at home and people who in their 30s who have been forced to move back in with their parents.

The rest of the total is made up of homes that will be needed in the future. The CBS estimates that by the end of 2040, over 19 million people will live in the Netherlands, largely due to immigration. That will require 436,000 new homes, ABF said.

Households are also getting smaller. By 2035, the average household will have 2.07 people, half the size of a household in 1950, according to CBS forecasts. That growth too will require 243,000 new homes.

In addition, 118,000 homes will need to be replaced because they have been demolished.

Expectations

The one million ‘is not cast in concrete’, housing market professor Johan Conijn told the NRC. ‘It is based on expectations about the future which may not come true.’ Social geography professor Jan Latten told the paper that prognoses are crucial because of the length of time it takes to develop new residential areas in the Netherlands.

He points out that immigration has consistently been under-estimated and that construction has failed to keep up with the changes. This means, he said, that the one million estimate could well be on the low side.

Conijn said long waiting lists, first-time buyers and renters who cannot get a foot on the housing ladder, and the high rental and purchase prices are all evidence of the problems facing the housing market.

‘The shortage of housing can grow or shrink, but it is extremely dependent on demographic developments and people’s housing preferences,’ he said.

In total, permits to build 74,000 new homes were approved in the Netherlands last year, a rise of 10% on 2020 and the highest number in more than 10 years, according to the CBS.