March 24, 2023

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Companies are afraid of commercial parties who build social rental homes

Companies are afraid of commercial parties who build social rental homes

Aedes Housing Associations is interested in commercial parties who build social rental housing. They have to comply with lower rules than housing associations and after a while they can raise rents sharply, so that social rent homes suddenly become free sector homes.

According to Aedes, municipalities are increasingly having social rent homes built by commercial project developers rather than companies. “Social rent is more than a house with a rent of €752 per month,” says Aedes President Martin van Rijn.

declaration of urgency

Businesses have a number of obligations, such as housing people declaring emergency or status holders. Business developers don’t have to. The housing association housing – provided it is not sold or demolished – will remain permanent social rental housing. Private parties can, for example, increase the rent when changing tenants and offer the house in the private sector.

“I also find it worrying that so few are being built by housing associations, they play an important role,” says Jan Fukima of NEPROM, the sectoral organization for project developers, in response. “But I think it’s all too easy to reprimand that they build so little because investors are stealing it.” According to him, there is an urgent need for cheap housing, and companies are not able to build it all.

Maximum and smallest rent

According to Aedes, housing associations typically build larger homes, so they are attractive to multiple target groups. Private parties often build smaller homes and often rent them out at the maximum rent. Fokkema counters: “We have a points system for the amount of rent you can demand quality from. These rules apply to everyone. Investors also rent out social housing for less than the maximum rent allowed.”

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The Federation of Dutch Municipalities (VNG) shares Eddis’ concerns: “It is a development that shows that market players want to realize social rental homes themselves,” says the spokesperson. “The market players state that these homes can be converted into the mid-rent or owner-occupied sector after a period of, say, fifteen years.”

No municipal land

According to VNG, municipalities are hardly in a position to cope with this, because developers often own the land and municipalities no longer own it. “In this case, affordable temporary homes will be built, but these homes are too small to provide a good, sustainable solution for the housing market. We are very concerned about this.”

According to VNG, municipalities had to sell a lot of land during the previous crisis due to financial problems. Municipalities also need commercial parties to do this. A spokesperson: “As a result of the owner tax, businesses can no longer build enough.”

Smaller share of housing association housing

The share of social housing for rent from housing associations in new construction has also fallen, according to a survey by the Land Registry commissioned by Aedes. Between 2017 and 2020, 262,000 homes were built in the Netherlands, about 42,000 of which were built by housing associations. That’s about 16 percent, well below the percentage of total housing association-owned housing: 29 percent. It is also below the target set by some municipalities to build 30-40 percent social in new construction.

According to Aedes, the number of homes in the Netherlands has grown approximately from seven to eight million in the past ten years. The number of social rented houses has remained more or less the same, so the share has decreased. “The target group for social rental housing has only increased. The need is great, but the share is shrinking,” says Martin van Rijn, President of Aedes.

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The chart below shows who was commissioned for the new construction and in which cities: