Circles

In the mid-1990s, housing associations in the Netherlands were privatised. The government wanted to leave housing construction to market forces, and corporations had to become market players. The latter happened successfully, with  housing associations becoming property developers.

900,000 new homes

As profits of these former public bodies increased, the government decided to skim off these surplus profits via the landlord levy. As a result, the corporations ran out of money to build houses and there was a housing deficit. In the meantime, the landlord levy has been repealed, but the damage has been done. Minister De Jonge sounded the alarm last year, announcing the construction of 900,000 new homes. The courts soon put a stop to the ambitious plans, as they were found to violate European nitrogen rules.

As a result of the war in Ukraine, prices of energy and building materials are rising, with construction projects therefore largely being cancelled. The minister devised another plan: To improve access to the rental market, he wants to raise the rent-control ceiling. As a result, the remaining investors in new construction projects are now also pulling out. This is because lower rental income means that they will not be able to complete their plans.

Rack-renters tackled!

There is also a lot of muddling along at the local level. To protect livability in The Hague, property entrepreneurs were banned from boarding up houses and subdividing large houses into smaller flats. The rack-renters needed to be dealt with! However, the courts also ruled against these plans,  finding them to be far too rigorous. Alderman Balster, meanwhile, also recognises that his approach is counter-productive. The subdivision of large houses into smaller flats in The Hague has fallen from one hundred and forty each year to three. Instead of there being more houses, there are actually fewer of them.

In fact, the ‘rack-renters’ referred to are often local entrepreneurs trying to accrue a pension by investing in real estate. They are now looking for other opportunities, because all the government measures have taken the fun out of investing. What have the tenants in The Hague got in return? Deutsche Bank as a landlord. The bank now owns two thousand homes in our city through the vehicle DWS.

Circles of powerlessness

While more and more people are relocating to the Netherlands, new housing construction has completely stagnated. All the plans have backfired and we are going around in circles. Circles of powerlessness.

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This column ‘Circles’ was written for Den Haag Centraal. Raymond de Mooij writes a monthly column about what he experiences in his practice.