Only 3 per cent more building permits in the first two months of 2021
23 april 2021
The housing shortage in the Netherlands will become even more pressing if the new cabinet does not push for faster processes. In the first two months of 2021, a total of 9,985 building permits were issued in the Netherlands. This is 3% more than in the same period in 2020, when in January and February of that year, 9,701 building permits were issued. If the number of permits granted does not increase quickly, the total number of permits over 2021 will not be much higher than the total for 2020, when approx. 66,000 were reached. A minimum of 80,000 to 100,000 building permits annually must be issued in order to adequately address the housing shortage in the Netherlands.
Nitrogen pollution policy and inadequate capacity at municipalities are the bottlenecks
The granting of building permits has been problematic for the last two years which means the government's ambition to issue 75,000 permits annually will not be reached. In 2019, the issuing of permits was greatly reduced due to the Nitrogen Pollution Decision that came down from the Council of State, and that decision continued to play an important role in 2020. In addition, inadequate capacity for those who must issue permits and finances at municipalities are inhibiting factors. Municipalities have indicated that more financial resources are needed to meet all demand. In order to increase the number of permits granted, both the new Nitrogen Pollution Law and capacity at municipalities must become less restrictive. Another option is to look into ways to accelerate the Spatial Planning process through new legislation.
Decision Council of State creates more uncertainty in environmental law decisions
As a consequence of the Council of State's decision on 14 April 2021, it is now also possible for interested parties in an environmental decision to appeal the decision after it has come down. Effectively, this expands the say and appellate options of stakeholders, so that plans remain uncertain for longer periods of time, and there is a greater chance of amendments to plans or even the revoking of a decision. Residential developers have indicated, however, that appellate procedures and the lack of sufficient planning capacity are important obstacles in the realisation of new homes. Earlier this year, research from Capital Value showed that 75% of developers had indicated that the issuance of permits was the most important obstacle in the realisation of new homes. The decision by the Council of State adds to the possible hindrances that must be overcome in the creation of plans. The limited capacity at the Council of State also creates delays. To ensure progress, it is necessary that the Council of State's capacity is also expanded in the short term.
Increase in housing shortage due to low number of permits
Since too few building permits have been granted over several years now, new-build residential output will start to decline from 2021. The average length of time between the granting of a permit until the completion of a new home is approx. two years. This means that the low number of permits issued in 2019 will cause a decline in home production in 2021 and an increase in the housing shortage. The shortage is expected to continue to rise to 320,000 homes in 2021 for certain, and it is highly probable that this figure could rise even higher.
Pension funds and housing associations want to build more affordable rental homes
The lagging provision of permits is extremely concerning because both housing association and Dutch pension funds are eager to realise new affordable rental homes. Over the next three years, pension funds have 7.3 billion euros available in this segment, and for these parties, building sites and the rapid issuance of permits are important requirements for investment. Recent research by Capital Value has shown that 92% of housing associations want to realise more affordable rental homes in the short term. The sector even reached an agreement with Minister Ollongren to build 25,000 new affordable rental homes annually, but this number was not even reached in 2020.
Marijn Snijders, Director Capital Value, "The new cabinet will have to prioritise accelerating procedures. More capital is needed for municipalities to expand capacity, and more scrutiny should be applied to legislation and expanding the capacity at the Council of State for appellate procedures. We currently have the momentum to address the housing shortage. Capital is available and market parties are keen to build and can build. If we push for faster procedures and fewer regulations, we can build enough to at least reduce the housing shortage in the coming years."