40% of housing construction projects halted by two-thirds affordable requirement
The construction of 40 percent of new homes is currently at a standstill because of the government requirement that two-thirds of newly constructed homes must be affordable. These projects are no longer profitable investments so investors stay away, real estate advisor CBRE found in a survey of project developers, the Telegraaf reports.
“A negative return is achieved on these affordable homes, which has to be paid for with the return on more expensive homes,” Frank Verwoerd of CBRE explained to the newspaper. With the two-thirds affordable requirement, that is often impossible or too risky. “Project developers then wait for better times or until the municipality or the government becomes more generous.”
The new Cabinet has adopted the affordability requirement from the previous Cabinet. It means that two-thirds of housing construction must fall into the social housing or mid-range rental segment, or sell for less than 390,000 euros.
In the Amsterdam region, 80 percent of homes built must be affordable. According to CBRE, a third more homes could be built if that requirement was reduced to 60 percent. That would mean 15,700 new homes, instead of 13,200. If the requirement was scrapped completely, it could be 18,600 new homes.
The surveyed project developers told CBRE that 60 percent of stalled projects could be realized if the affordability requirement was scrapped.
A substantial subsidy from the involved governments could also get halted projects moving again, Verwoerd said. “But if you relax those requirements, you have a method that does not require a subsidy.”
Today, there is a housing summit in Nieuwegein where Housing Minister Mona Keijzer hopes to make agreements about accelerating housing construction. CBRE hopes that the Minister will agree to scrap the affordability requirement at the summit.
The Economic Institute for Construction (EIB) is pessimistic about what the summit will achieve. In the past decade, there have been four such summits, each time with very little result. According to Taco van Hoek of the EIB, the government must create the right conditions and make more building land available if it wants to accelerate housing construction.
“The many players in the housing construction sector can effectively get to work with this,” Van Hoek told the Telegraaf. “If governments such as municipalities and provinces make more easy, smaller construction sites available on the edges of cities and villages, the market will follow automatically. If agreements are reached to build 25,000 homes per year on these sites, the summit will be a success. And no extra tax money is needed for this.”
