Let young people use their pension to buy a house: Dutch banks

Young home buyers should be able to use part of their pensions when buying a home. That's one of many suggestions economists from ABN Amro, ING, and Rabobank and several prominent experts made in a proposal to "thoroughly renovate" the housing market, the Volkskrant reports.

According to the economists, letting young people use part of their pension to buy their house makes it "easier for them to spend money at the time of life when they need it." Later in life, these homeowners will have a lower pension. But this "can be offset against the low monthly costs of living in a house which mortgage has been paid off."

The economists and experts also believe that homeowners have too much tax advantage compared to tenants. They want the government to tax homeownership in box 3 (assets) instead of box 1 (work). The mortgage interest deduction should gradually decrease while the notional rental value (an additional tax for homeowners) increases. The government can compensate for these higher taxes by lower taxes on labor, the experts said.

They also want the government to abolish the rent allowance and replace it with a  "housing allowance" for all low-income households - tenants and homeowners. This will protect vulnerable homeowners better if they lose their job. 

While these steps will improve the housing market, the experts added that the "only way" to solve the housing crisis is by creating more houses. They suggest a "plan benefit tax" to encourage municipalities to dedicate more property to housing development. If the zoning plan for a piece of land is changed from a business park to construction land, for example, the value of the land increases. Speculators and project developers already benefit from this. By taxing that increase in value, municipalities can also benefit from making more land available for housing. 

The banks also want to lower the loan-to-value ratio over time. Buyers can currently borrow 100 percent of the value of the owner-occupied home. The banks want to decrease that, which will mean people would have to contribute their own money to buy a home. That would hit first-time buyers hard. But according to the experts, if the whole package of measures is implemented, homes will become "less expensive, rents less high," and the net income of first-time buyers will increase. "So they can more easily save for buying a home."

This last plan should not be implemented until the housing market has cooled down, the experts said.