Can you outline some key proposals in the plan?
‘An important recommendation is to start taxing owner-occupied homes as assets, in order to reduce wealth inequality with tenants and to keep house prices down. That means that you pay tax if you sell with equity, and also on the home ownership itself.
‘Municipalities should also be able to benefit from a land use change. If agricultural land changes into housing land, the value increases enormously. Tax may then be levied on this. With these proceeds, the municipality can subsidize extra social rent or, for example, build roads. The risk is that municipalities will then take action: if they are short on cash, they could decide to have land built up for nature purposes after all.
‘The proposal to abolish the regulation of rents in due course is also interesting. The argument is that if landlords can earn more from a rental home, they are more likely to build new rental homes. Ultimately, this higher supply will drive prices down, the idea is. This is the exact opposite of what Minister De Jonge is doing now: he wants to introduce a points system, which already exists in the social rental market, in large parts of the free sector.’
The package contains measures that are not popular with right-wing parties. Reducing mortgage interest deductions and home ownership taxes, for example. The lease even goes against new government policy. How realistic is it then that these proposals will be picked up?
“The political reality, of course, is that small steps are much more likely than implementing a major plan in one go. If one would like to adopt these measures at all. And that makes it difficult: if you only implement part of the measures, unwanted side effects can arise, the researchers warn. Cherry picking is therefore not recommended.
‘Unfortunately, they also do not provide any order, such as: if you, as a policy maker, only take over part, then take this and this.
‘Especially the suggestion is that starters should use part of their future pension for the purchase of a home. Then you are actually borrowing from your future self, that would be a very drastic change. In any case, these proposals provide additional fuel for the broad discussion about housing market reforms.’
Will this package solve the problems in the housing market in the short term?
‘No. The only proposal that can have an immediate effect is to facilitate housing sharing. For example, benefits and pensions are now reduced if people start living together. If you abolish that, people will start living together more quickly, which means that homes will become available.
How long before the market is back in balance?
‘Well. In the most favorable scenario in fifteen or twenty years, but I highly doubt that it will be possible. Then one million more homes should be built by 2032, as planned. It seems to me a miracle if this succeeds, because the construction industry is struggling with personnel shortages, high material costs and long legal procedures. The number of inhabitants of the Netherlands should not have increased too much, nor should the number of single-person households. Otherwise, the new building will be full again.
Meanwhile, central banks are raising interest rates in response to high inflation. How will this affect the housing market?
‘An interest rate hike by the European Central Bank (ECB) contributes to rising interest rates on the capital market. This makes it more expensive for banks to buy mortgage money, which also increases the mortgage interest. It has more than doubled in recent months, but is still low historically.
‘At the moment there is great uncertainty among buyers and sellers about the rising inflation and the war in Ukraine. It remains to be seen what exactly this will do to house prices, but a huge plunge is not expected. The economy is doing well and employment is high. At the same time, the housing shortage is still large and the construction of new homes is not going to make any progress.’
Is this uncertainty already noticeable in the housing market in practice?
‘I spoke to a real estate agent who said that a year ago twenty or thirty people came to look at a house, now there are ten. He now gets two or three good offers on a house, last year eight to ten. There is also less outbid than in the past: people offer the asking price or slightly exceed it.
‘By the way, this applies to a neighborhood with many apartments in a large city. In other places, he still had to overbid more than 50 thousand euros to get a house for a client with an asking price of just under 40 thousand euros. So you do see a shift in sentiment in the housing market, but a price crash is not yet in sight.’