Netherlands needs better investment climate to increase rental home construction: DNB

To realize its construction ambitions for rental housing, the Netherlands will have to improve its investment climate, De Nederlandsche Bank (DNB) concluded in a study into the financing of private rental homes. Part of that is maybe scaling back rent regulations.

The housing shortage in the Netherlands has been a major issue for years, especially since the population is expected to continue growing. The government therefore wants to accelerate housing construction to 100,000 homes per year, including rental homes.

According to DNB, this task requires not only sufficient building sites, nitrogen emission rights, and personnel, but also substantial financial resources. “We estimate that €40 billion is needed annually for the construction of 100,000 homes. Approximately €6.4 billion of that concerns new private rental homes, that is to say, rental homes outside the housing association sector."

At the same time, public and private investments are lagging, the central bank noted. “Without additional investments, a capital shortage for the intended new construction is imminent.”

According to DNB, the Netherlands can improve conditions for investments by giving investors greater policy certainty. Make regulations more predictable, with a clear long-term vision, the regulator advised.

Central bank experts also urge that extra-statutory municipal requirements be scaled back. Municipalities regularly impose additional requirements on housing construction projects on top of national regulations. With fewer of these, projects can proceed more easily.

Finally, DNB recommends carefully examining whether the regulation of mid-market rents hinders new construction financing. "A heavier weighting of home value within rent price regulation could, for example, reduce barriers to investment."