Own house or high pension: the Dutch are offered a choice

Economists from the three largest banks in the Netherlands - Rabobank, ABN Amro and ING - together with real estate market experts have compiled a report that highlights the main causes of the housing crisis and how to eliminate them. In particular, the authors of the report propose to allow the Dutch, who are buying a home for the first time, to spend part of their pension savings on this purchase.

Comprehensive measures

Experts talk about the need for comprehensive measures in the real estate market instead of "point" solutions. For example, the government introduces softer lending conditions. But after that, even more money comes into the market, and housing prices rise.

Allowing the Dutch at a young age, but already with sufficient pension savings, to use part of these savings to buy a home, this will help optimize the budget.

Solution advantages:

• access to housing for those who previously did not have it;
• buying a home with your own money or using a loan that can be repaid in a short time;
• lower monthly housing costs (because the mortgage is paid off);
• the ability of the homeowner to freely manage his funds throughout his life instead of paying a mortgage.

However, the cons:

• low pensions for those who used part of their pension savings to buy a home;
• additional money will flow into the housing market, which will become a new incentive for prices to rise;
• the state guarantees the payment of a pension, while the owner is responsible for the availability and safety of housing - the risk of losing housing cannot be ruled out (and pension savings will already be spent).

Tenants and homeowners

For many years now, the gap between tenants and homeowners has been widening. According to representatives of De Nederlandsche Bank (Central Bank of the Netherlands), it would be useful to eliminate it for the prosperity of the country.

Experts of banks and the real estate market in their report suggest that the reform of the tax system should also be included in the solution of the housing issue. Homeowners should not be taxed in Box 1 (employment and property income) but in Box 3 (savings and investments). If you want to learn more about the tax system in the Netherlands, watch our webinars: https://www.youtube.com/watch?v=ANd-Ck7N8g0&t=396s.

The purpose of the changes in the tax system is less financial gain for some Dutch in the housing market than it is now, eliminating the inequality between tenants and homeowners. Experts also believe that it is necessary to reduce mortgage deduction (hypotheekrenteaftrek), which is already gradually decreasing. But the so-called conditional cost of rent should be increased. It is still a percentage of WOZ (Estimated Housing Value), which is added to income for a tax return. All of these measures should result in homeowners paying more taxes.

However, changes to the subsidy system are proposed as a protection for low-income homeowners. Instead of rent allowance - rent subsidies propose to introduce woontoeslag - a subsidy for housing. Woontoeslag will be available to both homeowners and low-income tenants. As a result, everyone will be better protected in the event of financial hardship (such as losing a job).