Towards a Better Balance on the Dutch Housing Market? Analysis and Policy Propositions

Although Dutch housing policies seem quite developed in terms of money and instruments, the Dutch housing market is not functioning effectively. Housing shortages are prevalent in areas of economic growth, property prices are high, and substantial segments of the population are experiencing accessibility and affordability problems. We think that this is partly due to the fact that the current Dutch housing policy is inconsistent and ineffective. The government provides strong support for the demand for housing (via mortgage interest relief for owner-occupiers and rent allowances for tenants) but, at the same time, it is enforcing regulations and planning restrictions that are hampering the production of housing. Furthermore, the rent allowance is means-tested whereas owner-occupiers from all income groups are eligible for fiscal support. This creates a gap between the rental sector and the owner-occupier sector and obstructs movement between the two. In order to tackle these problems, the VROM-council – an advisory body to the Dutch government – has submitted proposals for a major reform of Dutch housing policy. This paper describes the analysis and the reform proposals in the VROM-council's report to which the authors of this paper contributed. The last Section of the paper also addresses the political context in which the report was presented. This context is relevant because housing policy reforms are a politically very sensitive issue in the Netherlands, as in most other countries.