Dutch Public Housing On Low
Private Housing Market Frustrated
-by Toon Janssen
DWT Amsterdam correspondent
Note: in the Netherlands— and the rest of Europe— the political term ‘liberal’ refers to someone who prioritizes individual liberties and limited government, encompassing some aspects of American ‘conservative’ thinking.
The Netherlands has had a serious housing shortage for some hundred fifty years, basically since the Industrial Revolution. The Second World War dealt affordability and availability a huge blow… and the shortage stayed: too few social housing units, unaffordable private homes, and waiting lists for any rental property, too long, and at high prices. Moreover, deficiency changed character over time. There were some obvious reasons for this. The Dutch population doubled— for example— from five million beginning 20th century to eighteen by end 2024. Then, household size decreased from 4.5 to 2.1 persons in the same period. And today, of a total of 8.4 million households, 3.3 million of them are single-person households. But there was more involved.
Also contributing to the shortage, was that young people in particular had difficulty finding homes. Chances for singles, students, young expats or starters— tenants as well as buyers— have dropped over the years, with many people’s lives on pause. They often had no choice but to continue living with their parents. In contrast, many elderly stayed put in too large houses, without kids that had long since left. Often they could not leave due to the gradual breakdown of the Dutch welfare state. Then elderly were convinced to live on their own for as long as possible— that would be better for them and cheaper for society— which led to major and much criticized demolition of nursing homes.
But there were still more issues contributing to the shortage. Car ownership and infrastructural transport works took a large share of small Netherlands— with 16,040 square miles, less than half the size of Maine. And then there is space taken up by agriculture, business and recreation as well. In addition, the 2007-11 banking crisis— with the attendant collapse of the financial system— basically put economic growth on hold, home building included. The last issue we need to mention here is the nitrogen problem. Since construction by definition produces emissions, this turned out as major obstacle for many housing projects.
Let’s start with a little historical context. Cornelis Corneliszoon van Uitgeest (1550-1600) was a Dutch miller who became owner of a patent— awarded in 1593— that would change Dutch society enormously. His wind-powered sawmill Juffertje used a crankshaft to convert the circular movement of the shaft into a back-and-forward motion. This made sawing logs into planks much faster. The invention played a key role in the economic success of 17th century Dutch Republic. Afterwards, hundreds of mills transformed the Zaan river district— just north of Amsterdam— into an important industrial area, enabling mass construction of trade ships from wood supplied by Baltic lands. In March 1602 the Dutch East India Company (VOC, 1602-1800) was established. The early joint-stock company grew into a trading multinational with quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, strike its own coins, and establish colonies. At some point, 4,785 VOC ships— made of saw mill planks— controlled trade of multiple colonies and countries from East and West. As a result, immense amounts of capital were invested in reclaiming polders and peat districts, as well as in projects enabling the rise of the Dutch version of the Industrial Revolution. However— as time passed— the Republic had internationally lagged behind, due to success of windmills combined with lack of coal or iron. Countries like England and Belgium— rich in these minerals— had taken the lead.
During 19th century, both an agricultural and the Industrial Revolution caused major changes in Dutch society. These entailed going from manual work to mechanized factory production by using steam from engines. Better agricultural techniques— and that’s how it started— ensured an increased output per worker, accelerating the decline of the agricultural labor force. The landless started frothing around and looking for work elsewhere, adding to the urban proletariat on which industrialization depended. The countryside emptied and the cities filled up, leading to development of poverty-stricken slums— in or next to older centers. Living conditions were bad there, since migrants and their descendants had to rely on overcrowded alleys, where they lived in shacks, damp basements or moldy alcove homes— at high rents. They often had to share their dwellings with extended family members, cramped in one room only— including a poop box and a kitchen countertop. Since decent sanitary facilities or running water weren’t present, hygienic conditions were poor. Diseases such as malaria, cholera and typhus were constantly lurking to break out.
Also in the 19th century, pressure on city housing markets— by overflow of migrant workers— created ideal conditions for real estate speculation. So-called revolutiebouw responded to house shortage: private landlords— wanting to invest bank loaned money— were allowed to build outside the canal belts and urban cores. In this way many new urban districts were created— quickly, cheaply and shabbily executed, once more at high rents.
Ensuring acceptable housing for the population was not seen as a governmental task in those days. Eventually it became clear that market forces alone would never solve the problem, including its impact on society. It all came to a climax in 1886, when a fatal cholera-epidemic helped raise awareness and paved the way for support of a governmental Health and Housing Law. In 1901 the so-called Woonwet— Housing Act— was finally passed, enabling authorities to draw up compulsory regulations. Building without permits was then prohibited and municipalities became responsible for urban development plans. Qualitative requirements were also imposed on homes: the maximum number of residents was set and sleeping, cooking, washing and sanitary facilities were separated.
The financial side of policy— of main importance in context of this DWT post— was then confronted by The Hague government. Municipalities would provide loans for construction and operation of social housing, for clearing out slums and purchasing sites. These were granted to both individual house-builders and housing corporations. While private production bogged down— due to high prices and shortage of building material during First World War— from 1901 onwards the corporations were encouraged to build woningwetwoningen, ‘low-rent housing law homes of the simplest permissible type on site’, as set out in the law. They succeeded on large scale, until the Second World War forced a halt. You may wonder, why it was corporations that came to play such important role?
Since in those days the country was still highly compartmentalized, various social and religious groups founded their own associations— encouraged by trade unions. Whether Catholic, Protestant, Jewish or socialist, they all came to represent sectors of society, including construction. However— concerning the latter— their interest was not in building exclusively, they also became socially involved and eager to uplift the general living conditions of workers. Inspiration was derived from early English Rochdale town weavers who— in the 1860s— had united in consumer cooperatives and founded the first housing corporation ever— for members only— with profit flowing back to the labor movement. Subsequently in Holland, bakeries, milk shops, banks and— important to note— housing companies were established on cooperative base. In wake of the weavers, their resident workers were also encouraged to share responsibility and join resident-run committees, behave properly and take part in social activities. As Catholics had their Marian processions and socialists their residents’ performances— with left-wing battle songs— both were focused on the same goal of solidarity.
From the 1920s onwards, mixed working and middle class neighborhoods were built— away from congested city centers but still close to it and within city limits— with some typical village characteristics, such as low single-family livings with gardens, small shops for daily necessities and an association hall. The idea behind it was to counterbalance the older rundown city centers, slums and revolutiebouw quarters. For this, planners and corporations— joined by entrepreneurs who focused on the private sector once more— had welcomed new ideas in urban planning from England once more. But then suddenly— despite progress made— almost all activity came to standstill by world-wide 1929 Great Depression. As the Dutch government had tackled the shortage with subsidies, now those benefits disappeared. Parallel, private entrepreneurs pretty much kept at arms length. Once the worst was over however, the entrepreneurs started focussing on the profitable owner-occupied market. Many high-quality homes were constructed, conveniently located away from crowded urban centers and of solid architecture. These houses had brick laid facades, wide tiled roofs, exteriors hallways with awning, bay windows and high ceilings. Nevertheless, thesewere unaffordable by members of the working class.
It was not until 1950 that Wederopbouw— Reconstruction— would start. War damage was extensive, 90,000 homes were destroyed, some 400,000 seriously damaged while construction suffered a standstill. Meanwhile, population growth boomed, with many young married couples searching for a place to start families. But still, there was no rush at all for home construction initially, since first damaged factories, companies and infrastructure had to be rebuilt, to secure work and exports. To this end government— which slowly came out of hibernation— pursued a guided wage policy and kept rents low by huurbevriezing— rent freeze. After many dilapidated houses had first been demolished, construction in social housing gradually increased— being subsidized again. But then in the 1950s and 60s, the slow course changed and the housing shortage was declared the number one enemy. Corporations— now with well-filled wallets— took the lead. House production increased to 100,000 a year, including high-rise apartments in extended newly developed residential areas.
The latter however, suffered from monotony, uniformity and low quality. While the millionth home was delivered in 1962 and 10 years later the second millionth, it became inevitable quality had to improve. Next to new high-quality high rise much nicer urban districts emerged— even further away from city cores. The new credo became variety, including detached, split-level and drive-in homes, as well as patio dwellings.
As the 1901 Housing Act had been amended several times, later adjustments focused mainly on deregulation, simplification and market forces. By a mid-90s law for example, corporations were instructed to operate as profit-making companies, since government austerity ended subsidies. As a result, corporations— now headed by ‘managers’— raised extra funds from banks and sold depreciated rental properties. Market forces were magic words back then. But early 21st century— when the last amendment was executed— the position of corporations was at stake. They were accused of drifting too far away from the core task. Next to housing— it was argued— their managers had committed themselves too much to grotesque environmental living improvement, to shady housing projects abroad and investment in special forms of housing— on boats for migrant workers among others. Some corporations— it was claimed— turned out to be downright incompetent and were accused of engaging in risky commercial adventures. In addition to building for the regulated low-income rental sector, they had also started providing houses in the more expensive private rental as well as owner-occupied sector. Many people thought these new tasks were incompatible with government support and ethics. In short— to critics— ‘the moral compass was missing’. Therefore, corporations’ tasks were limited and supervision tightened by law. In 2018 for example, a liberalisatiegrens was set, a maximum rent— by then 711 euros— for new social housing. So then corporations returned where they left: ‘providing low-income housing to actually 40% of all households in the Netherlands’.
What started in Reconstruction— building one million homes every ten years— was repeated in 1960s and thereafter, once more with Vinex. This Forth Spatial Planning Memorandum Extra was a 1988 ministerial paper about future organization of Dutch space. It mainly focused on Holland as dynamic transport country, with international hubs such as Rotterdam Harbor and Schiphol Airport. Socialists back then demanded an attachment for housing, resulting in the addition Extra. In wake of Vinex new large-scale housing locations— vinexwijken— were realized, outside the limits of existing cities. Then, under supervision of Ministry of Spatial Planning (VROM) an additional 1 million homes were added once more in just ten years— but now for the last time. You may wonder why it did not happen more often after. Wasn’t there already a well-oiled system of corporations to achieve that? What stopped Holland from making an emergency plan?
Because the country is now still facing shortage— with emphasis on the word ‘still’— this question is justified. When need was urgent in the past, unorthodox measures were then taken that worked: state financing of corporations. But that policy— of main important in this context— was abolished by successive ruling neo-liberal aligned politicians. To the shame of various Mark Rutte Cabinets (2010-24) solutions were sought in further commercialization of corporations, leading to low profile-property being sold. Former VROM Minister Stef Blok— to many critics the ‘butcher that put the Netherlands on sale’— was the main advocate for this policy. He had no difficulty recruiting investors abroad— including US mega investment holding Blackstone— for Dutch houses to be disposed of. Stef Blok went down in history as ‘first minister ever to be happy his department was disbanded’— which he actually executed in 2010. The bottom of the market— low income tenants— got yet another kick from him: verhuurdersheffing (2013), a tax on wealth corporations had to pay ‘to achieve a budgetary return for treasury by enforcing home sales to investors’— as stated by law. However, the effect was disastrous, since corporations shifted the levy through rent increase and became reluctant to build. Apart from the unwanted tax the restraint was also caused by inflated material prices. Anyway, the reverse from what was initially planned happened. It did not come as a surprise, that The Hague— as of January 2023— abolished it, realizing corporations that way would spend more budget on reducing shortage.
At the same time the government promoted home ownership while favoring buyers. The hypotheekrenteaftrek— mortgage interest deduction— for example, was a 2001 tax measure that allowed interest and costs for buying your own home to be deducted from income, before tax levy. It served as policy instrument to encourage home buying and was used widely after 1990. The advantage— that cost Dutch treasury nine billion euros a year (2021)— gave buyers a boost indeed, but had an upward effect on house prices and was to the detriment of renters. Hypotheekrenteaftrek was therefore a sensitive subject for several governments, especially for liberal VVD party. Although many wanted the scheme to end, it still exists.
Another measure that aroused much resistance was the ‘exult ton’, a tax free one-time donation of 100,000 euros for (grand)children aged 18 to 40 for buying a home or paying off a mortgage. The 2017 arrangement also caused much resistance— creating inequalities at taxpayer costs— and was abolished recently.
Since nowadays average sale price of homes is 423,000 euros, this amount is not affordable for most people, who therefore depend on social housing. Mainly for this reason government kept the corporation system in place, although slimmed down by severe cuts. It aims to have 30% of all homes in the social rental sector by 2025— a 10% relapse over just a short period. To tackle high rents tenants faced— huursubsidie— an allowance system that existed since 1971 was adjusted, starting 2024: for monthly rents below 900 and incomes below 40,000 euro— depending on extras such as rent amount, property, age or household size. There was a price tag attached for this: 6 billion in tax money annually. However, the cash deck of corporations was not supplemented that way.
Meanwhile the waiting lists on the overloaded rental market did not shorten and— apart from this— too little had been built anyway. As of this year, the country is short 400,000 homes and at least one million should be added by 2030. As indicated in the introduction of this post, there were multiple explanations for shortage. Some causes— however— have yet not been mentioned: nimby procedures and nitrogen.
Nimby— ‘not in my back yard’— is a characterization of opposition by residents to proposed real estate and infrastructure projects in their local area. It carries the connotation that residents don’t want their neighborhoods getting crowded. Sure, legal protection is a right local residents feeling threatened have, but in practice it could mean that individual complainants may hold up major plans. Projects in densely built-up areas in particular were therefore struggling with high percentages of objection procedures. Some nimbys were accused of financial gain by making court visits a pricy revenue model: ‘a good lawyer will always make nimbys a profit’.
As for now— in this context— farmers also do not make it any easier. They started all kinds of proceedings to prevent nitrogen and manure reduction. They claimed it to be much more of a social problem, with other causative agents. Despite their demands having been rejected by judges, Minister of Agriculture Femke Wiersma— member of farmer-citizen movement BBB— begged Brussels for an exception position. For her it was all crystal clear: ‘no forced livestock reduction for nitrogen reasons, we leave it to the farmers themselves. And manure? They can tackle that one with innovations’. She felt supported here by ruling populist right-wing Schoof Cabinet. Meanwhile however, other sectors of society face serious problems, next to housing. These accuse farmers of frustrating permit procedures and overall progress for nitrogen reasons, risking that way a lockdown.
Now— overseeing everything— the main reason for shortage is first and foremost: too little new construction in part because building has become so expensive, project developers are staying away. As financing rental and owner-occupied housing proved problematic over time, the Dutch government urgently must decide what to do next. “Since large scale home construction is impossible without subsidization, the well-greased machine of corporations might be valuable here,” experts suggested, “but then there should no longer be doubts with government about private or public approaches.” In this context however, a recent notice caused a stir, entailing a historical 5.8 % rent increase for public housing for 2026, almost 3% above expected inflation. “How did they come up with the idea to do it this way?”— Dutchmen of all kinds are wondering— ‘“that is not what populists that now run promised!”
Ministry of Public Housing Mona Keizer— also BBB— recently seemed decisive, wanting to speed up and cut regulations as well as objection procedures by introducing a bill. The positive thing about her proposal— being talked about for years— is that it focuses on eliminating this year’s shortfall of 400,000 homes. But, how would she manage catching up? By allowing— without permit— construction of a home on one’s own yard for informal caregivers and first-degree relatives? By making fast legal decisions regarding construction locations? By prioritizing urgent cases? “As we have come to expect from populists, it mainly contains good intentions. In fact very much of the same, it won’t really make any difference. The judge will whittle her back” was declared by media— adding to her chagrin. And vision? Nitrogen or lock down? It remains in her fog: “We are short in housing! We need a new balance in current legislation. I’ll go to Brussels for that.” Unfortunately, she did not mention policy directions regarding corporations.
As you may conclude now, we’re far from happy about current trends. Might new insights in spatial planning help? The assumption that high-rise building results in densification has proven to be only partially true. Also building on top of low-rise buildings would turn out to be a drop in the ocean. Filling up the countryside then? Brussels for sure will not be happy with that, neither farmers, neither other competing space consuming functions. Why not go for new techniques then? Sure, ‘let’s embrace tiny homes, prefabs and robotic cement printed homes’— experts suggested— ‘the latter in particular could be helpful realizing the main goal: fast home construction at low labor costs’.
Tackling shortage implies huge neighborhoods and cities to be developed, with social housing projects financed by public money. Does not this correspond to the basic principle of 1901 Woonwet, drawn up when unorthodox measures were taken? To the opinion of many the well-established corporations must be boosted for the job. ‘But then a number of things need to be straightened out’, eager opposition politicians in The Hague corridors suggested: ‘Mortgage interest deduction for house buyers, for example! Reduction of social housing by 10% in favor of private sector, for another example! Rent increase causing households to be excluded from rental subsidy, to add more! And, granting priority to migrants and expats! These regulations should all be reconsidered.’
If Dutch society wants to go for that— your correspondent cannot conclude otherwise— then it will depend on voters to decide what and how. In that case it will not be about money, since the Netherlands— in international perspective— is prosperous. Nowadays pension funds have assets worth 1.500 billion euros while there are 600 billion in household saving and checking accounts. At high priority, that money could flow to housing.
