Concerns about high rents; ‘Eats up a lot of income

We’ve lost an increasing share of our income to housing costs. Tenants in particular seem to notice this. Statistics Netherlands today reported that rents rose by an average 2.9 percent in July. There are now major concerns that people pay too much rent. But how much more do we now spend on our housing costs?

The housing market has changed considerably in recent decades. Matthijs Korevaar has been researching housing costs for Erasmus University for years. “In 1911, Amsterdammers lost an average of 16.2 percent of their income to a house. In 2015 that was 38.9 percent.” According to Korevaar, the percentages are probably slightly lower in the rest of the country. “But it’s clear that we lose a much larger part of our income to housing.”

Better homes

According to Korevaar, we just have to remember that homes are very different nowadays. For example, on average we live with far fewer family members on much more square metres than a century ago. And homes nowadays are equipped with many conveniences, such as a bathroom. “The quality of living has really improved and if you take that into account, the increase is not that bad,” says Korevaar.

Still, according to him it doesn’t mean that worries about rising rents are unjustified. “We see that rents have been rising faster than incomes since the 1980s.” Adjusted for inflation, rents have risen by 21 percent since 1996. Average CAO wages rose by only 8 percent over the same period:

Prices for social housing in particular are regulated. These are allowed to increase with inflation, but there is a maximum. For example, the maximum social rental increase this year is 5.1 or 6.6 percent, depending on your income.

Homes in the free sector are just not bound by these kinds of rules, landlords have more freedom. According to Statistics Netherlands, housing costs in the free sector have risen relatively faster in recent years than in the social housing sector.

Against my will and thanks

According to the Woonbond, this is a worrying development because more and more people are renting in the free sector. “People live there against their will and thanks because they often earn too much for a social housing but can’t get enough mortgage for a house for sale,” says Marcel Trip of the Woonbond.

In recent years, despite rising house prices, house owners have even seen their housing costs fall, mainly due to low interest rates.

The National Institute for Budget Information (Nibud) is seriously concerned about rising rents. At the moment there are already about 800,000 people who have a too high rent in relation to their income. “Now with the corona crisis, we are afraid that this number will only increase further,” says Nibud director Arjan Vliegenthart.

According to Nibud, the high rents have made it more difficult to build up a buffer. Moreover, starters have to have their own piggy bank because you have to take more and more of your own money with you to buy a house.

Dishonest

A large part of the housing costs of homeowners is accrued from equity. After all, homeowners can sell their home again.

The housing market should be divided more equitably between home tenants and home buyers, according to independent Marijke de Leeuw:

Nevertheless, according to Nibud, the one-to-one comparison between mortgage costs and rents is a little too short. It is often not taken into account that a house for sale also includes costs such as insurance, taxes and maintenance, which are often included in the rent. If these costs are included, the differences between the housing costs for the same type of house of tenant and home owners are not very large.

Nevertheless, the information institute is seriously concerned about the evolution of rents. Nibud thinks that simply freezing rents is not enough. “Rents will have to be reduced. Too large a group can’t actually pay its housing costs right now,” says Vliegenthart. In addition, according to Nibud, rents in the free sector must be regulated more strictly.

In the Lower and Upper Houses of Parliament, too, there were lively discussions with Minister OIlongren about rents. A number of parties, including the SP, want Ollongren to freeze rents in times of the corona crisis. The minister prefers to look specifically at tenants who get into trouble and does not want to freeze rents in full.