Politicians’ proposals over ever-rising house prices

The current housing crisis in the Netherlands is so big that people have taken to the streets to express their anger and frustration that affordable housing is no longer attainable. Right now, the idea of buying a house or even renting one is getting more and more unattainable for many, given the constant rise in prices and rents. The protests aim to put pressure on politicians to act against the housing shortage. But can the government actually do anything to prevent house prices getting higher and higher?

Politicians’ list of measures
Het Financieele Dagblad published a highlight of the measures that politicians have put on the table to try to make housing affordable again.

  1. Build more homes. This solution is the most often mentioned, as the country has a massive housing shortage, and the problem of not building enough houses has existed for years. To build more, it’s essential that the national government gets involved in housing construction and not just leaves it to municipalities and provinces. Thus, the current government has set itself the goal of building almost one million homes by 2030. Nevertheless, the most significant problem with this is that there is not enough money to carry it out; moreover, suitable land to build is scarce.
  2. Fiscal adjustments. The current mortgage interest deduction scheme is set to reduce the interest rate on a mortgage in order to encourage homeownership. However, this has proved to boost the house prices rather than lower them, because people have an even more considerable margin to bid. Also, the way that taxes are charged right now leads to significant inequality between homeowners and renters, giving owners a tax advantage, while leaving the renters in a “no way out” situation.

The different political parties disagree on who should pay mortgage interest and how much interest should be charged. A conclusion is not yet in sight.

  1. Scrap the ‘Jubelton’. The ‘Jubelton’ is an existing arrangement by which parents can give their children a one-off €100,000 tax-free gift to buy a house. Its purpose was for people to lower their mortgage debt and to transfer money from the wealthy boomer generation to younger people.

However, those benefiting from this exemption have used the money to place higher bids and buy more expensive houses, thus contributing to the rising prices. Political parties are in disagreement on whether the ‘Jubelton’ can and should be abolished.

  1. Dealing with investors. Investors put pressure on the housing market by buying more and more houses, thus tightening the market and reducing the chances for first-time home buyers to find a home. Furthermore, investors renting out their houses take advantage of their positions, and so rent prices have soared in recent years.

All political parties want to act against such investors. Some want to place a higher tax on landlords. Others prefer a “buy-out ban” to keep investors out of the housing market. Yet others want to abolish the free rental sector altogether and regulate rents through a points system. However, the chances of applying this last solution are slim.

  1. Taxing excess value. Through a tax break, people who already own a home, can now bid higher on a new house. This leads to higher house prices while creating wealth inequality between people who own a home and those who don’t. This solution suggests taxing the surplus value that people possess in their current homes, so they will not be able to bid excessively on their next home.

Overall, the ongoing housing crisis means that many people are currently unable to find a home, putting pressure on politicians to create a solution and stop the madness. But will these proposals be enough to make housing affordable again

Written by Bárbara Luque Alanis