The effect of the Dutch elections on the Dutch residential investment market
31 maart 2021
The recently held Dutch elections showed that the liberal-conservative party VVD is once again the largest party with 34 seats (out of 150 in total), followed by the social liberal D66, who became the second largest party with 24 seats. The two parties will be leading in forming a coalition with smaller parties in order to have a majority in the House of Representatives (76 seats). An update on possibilities is expected in April and a general agreement on the main topics is expected this summer.
All parties agree on urgency of housing shortage
What the outcome will mean for the Dutch residential market is still unclear. It is clear however that all parties agree on the urgency of the topic. The housing shortage in the Netherlands increases further every year and has never been discussed more heavily as during these elections. Although parties might have a different view on 'how' to act, all parties do agree that actions must be taken in reducing the shortages and whereby the government must play a larger directing role in speeding up the housing construction. For example, by implementing the 'Actieagenda Wonen', an initiative by 34 larger organisations that are active in the housing market with plans to do this (Aedes, IVBM, Neprom, NVM, NVB and various municipalities and provinces).
In recent years, there has been a lack of governmental directions and controversial but necessary choices have not been made. The cabinet played a negative role by instead of making the housing market healthy by adding affordable homes, the emphasis has been placed on the distribution of scarcity, with higher transfer taxes and interventions in rents.
Compromises unavoidable
The new cabinet will again have to make a lot of compromises, because it will again have to consist of four parties for a majority. It is clear though that the two largest parties will play an important role. In general VVD will prioritise economic recovery and support for middle incomes and SME's. For D66, a long lasting and sustainable recovery of the Netherlands will be very important, as well as equal opportunities for everyone.
For the housing market VVD stated in their election programme that they want a national housing construction fund and more financial support for municipalities that stimulate housing construction. Also, they want more measurements against so-called scheefwoners (people who occupy regulated homes who would not be eligible due to an increase in their income) and stimulate housing associations to focus on construction of affordable homes (regulated sector) and selling mid-and higher priced rental homes.
D66 wants to appoint a ministry of housing, something more political parties mentioned in there election programme, and wants to reduce nitrogen emission in other sectors to make the construction of more homes possible. D66 also calls for more measurements against 'scheefwoners' (as does VVD), but wants to add a maximum on rent indexation and more possibilities for municipalities to control the initial rent. D66 sees a role for housing associations in the mid-priced rental segment in contrast to VVD. Between D66 and VVD, the discussion will likely be about the balance in policy regarding Europe, sustainability and equal opportunities.
The challenge for the housing market
Real estate benefits from a strong spatial planning policy, with housing in the first place. A stable cabinet with a long-term vision without extreme market interference is needed. By having two experienced parties in the lead of the formation, the subtle interplay of public – private parties should be easier to master. In addition, there is probably more attention for the European perspective. Rutte (VVD) and Kaag (D66) are two leaders with a lot of international experience. It is likely that The Netherlands will become an even more important player in Europe. The German elections (Sept. 26th 2021) will also be decisive for the approach of the new cabinet towards Europe.
Foreign capital needed to expand housing stock
Whatever the outcome may be, it is clear that the task of reducing the housing shortage will be a high priority for the upcoming Cabinet. Dutch pension funds and private residential investors will play an important role in reducing the housing shortage, but the capital and experience from international investors will be very important to be able to build enough homes, especially to create more adequate housing for specific target groups, such as students and seniors.
More information?
For more information on the Dutch elections or the developments on the Dutch residential investment market, please contact our international residential advisers Clemens van Vuurde or Esther Murk.
Also watch our 3-minute video about the developments on the Dutch housing market.