New homes through top-ups, splitting bigger buildings increasingly unattractive: ING

The Jetten Cabinet is not expected to meet its target of 15,000 additional homes per year through renovations. According to a report by ING, adding extra floors and splitting existing buildings are becoming increasingly less financially attractive. As a result, it is becoming even more difficult to reduce the housing shortage.

According to the bank, the number of such homes created dropped from approximately 17,500 to 10,700 homes in four years. New homes resulting from renovations account for a significant portion of the total annual number of new homes, at about 15 percent. Adding extra floors, also called top-ups, involves constructing an additional living level on top of an existing building to create more homes.

“The fact that fewer homes have been created from renovations over the past four years is because it has become increasingly less attractive to realize new homes in this way,” said ING. This is because rental yields are too low due to regulatory measures by former Housing Minister Hugo de Jonge. At the same time, renovation costs have risen sharply.

According to ING, both building material costs and labor costs have increased by approximately 25 percent over the past four years. Increases in property taxes also made it less attractive for investors to renovate properties.

The Cabinet has indicated that it intends to take measures to turn the tide. What those measures are remains unclear.