Quickly reducing high rents will not solve housing shortage: ING

The government’s plans to quickly reduce high rents won’t reduce the housing shortage, but may increase it, ING said in a report. According to the bank’s sector bankers, the only way out of the housing shortage is faster construction.

ING examined the government’s plans to regulate mid-level rentals and implement a national requirement that two-thirds of housing construction be affordable homes.

According to the bank, these two policy plans will not have the desired effect. In fact, they’ll slow down housing production by worsening the financial feasibility of construction plans. The persistent uncertainty around government policy also makes investors more reluctant to invest in housing construction.

“The shortage of affordable rental housing can best be solved by combating the cause and not the symptoms,” real estate banker Sophie Kraaijeveld said in the ING report. “An acceptable return for investors helps prevent a decline in housing construction and an increase in the housing shortage.”

According to ING, the best way to help people with a mid-level income who are currently struggling to find a suitable home is to address the housing shortage. That requires creating more homes and lowering the demand for housing.

ING suggested the government focus its measures on encouraging and supporting market parties and housing associations in quickly realizing housing construction projects. It mentioned targeted construction subsidies, reducing construction requirements, and speeding up permit processes, among other things.

The government could also reduce the demand for housing by fiscally encouraging home sharing. For example, it could scrap the cut to state pension and social assistance benefits that come with sharing a home.