The much-discussed rent freeze announced in the Spring Memorandum is not only bad news for the construction of new social housing, but also affects the development of mid-rental and private sector housing. An analysis by Capital Value shows that, in 2025 alone, the construction of approximately 5,500 mid- and private-sector rental homes is also at risk due to the announced measure. This is because many social housing units are built as part of mixed projects. If the housing corporation, which would normally purchase the social housing units, drops out, it could mean that the entire project cannot proceed, resulting in a decrease in the number of newly built homes. This must be prevented, especially now, as the number of building permits issued in the first two months of 2025 has already dropped by 26% compared to the same period last year. The target of building 100,000 homes per year is therefore moving even further out of reach. The construction of new rental homes now requires stimulating measures rather than the inhibiting effects of a rent freeze.
Social housing in 37% of new rental projects key to construction start
An analysis of residential investment transactions in 2024 shows that at least 37% of all newly built rental homes are part of a mixed project consisting of social, mid-market, and private sector rental units. The construction of rental homes in all three segments is therefore threatened by the rent freeze on social housing, as these projects often cannot be realized without a buyer for the social housing units. This casts new light on the rent freeze for social housing that is part of the plans outlined in the Spring Memorandum. Sector organization Aedes already indicated in response to the plans that approximately half of the new construction projects planned by housing associations would not be able to proceed if rents are frozen in 2025 and 2026. Based on the building permits granted for rental homes in 2024 — projects that would need to start construction in 2025 — more than 6,500 corporation-owned homes are at risk. However, based on Capital Value’s analysis, it can now also be stated that the construction of another approximately 5,500 mid-market and private sector rental homes is at risk, because these homes are part of projects where the corporation’s role as the buyer of the social rental units is crucial to starting construction. The risks will be even greater in the years after 2025, as many projects for the coming years have not yet obtained their permits. As a result, the housing shortage could worsen significantly, potentially reaching 453,000 by 2027.
