"Doubtful" that government's €2.25 bil. construction incentive led to more homes

The €2.25 billion the government pushed into its Housing Construction Incentive (WBI) in recent years did not contribute to faster housing construction. It is also “doubtful” that the measure resulted in more homes being built, the Court of Audit concluded after studying the effects of the government’s main financial instrument for combating the housing shortage in the Netherlands.

The government reserved €2.25 billion for the WBI for the 2020-2024 period. This money was paid to municipalities to help them build “faster, more, and more affordable” housing. The only one of those objectives that the WBI achieved is that the funded projects contained a higher percentage of affordable housing, the Court of Audit concluded. The Court of Audit urged the caretaker Cabinet to reconsider or drastically amend the WBI.

To qualify for the WBI, housing construction projects had to meet several conditions to ensure that they would actually happen, including that construction would start within three years. According to the Court of Audit, projects rejected by the WBI mostly went ahead as planned. It is therefore far from certain that the WBI actually led to more homes being built, or will do so in the future.

The WBI definitely did not result in the desired acceleration of housing construction, the Court of Audit said. Construction delays occurred just as often for projects with a WBI grant as for those that were rejected. So far, only 62 percent of projects with a WBI grant managed to start construction within the required three years.

Construction delays are caused by long objection procedures at the Council of State, staff shortages in the construction industry, and time-consuming investigations into things like noise pollution, parking pressure, and environmental damage. These delays affect projects with and without a WBI grant. “More public funding is not the solution here,” the Court of Audit said.

The only positive effect of the WBI, the Court of Audit noted, is that the percentage of “affordable homes” is higher in projects with a WBI grant than in those rejected for the subsidy.

The government could, therefore, adjust the scheme so that it focuses only on encouraging affordable housing construction, the Court of Audit suggested. Or it could change the WBI to only support complex construction projects.

The next, already announced round of WBI subsidies will not lead to more and faster housing construction. To achieve that, the government should work towards shorter procedures and more building sites, the Court of Audit said.