Chief economists from the three big Dutch banks, and two professors of finance policy have outlined their thoughts on getting the housing market moving again – by increasing taxes on home owners and boosting the supply of new homes.
The government’s current strategy is based on ‘papering over cracks’ rather than boosting access to the housing market, reducing inequality between tenants and home owners, and tackling prices, the five say in an article in Thursday’s NRC and economists’ journal ESB.
They argue that home owners pay relatively little tax, which is why the Dutch are keen to put so much borrowed money into bricks and mortar. This could be partially tackled by shifting home ownership from Box 3 to Box 1 in the tax system, and treating property as an asset. Tax could then be paid on the ‘profit’ when the property is sold.
At the same time, housing benefits which are paid to people on low incomes in rent-controlled properties could be extended to cover home owners with a low income as extra support.
To stop people borrowing beyond their means, which is also putting up house prices, the official recommendations on borrowing – currently 100% of the value of the property – should not be expanded and could even be reduced, the economists say.
Energy costs should also be taken into account in determining how much people can borrow.
‘These reforms are a break with the past and that is why they should be introduced gradually,’ the economists say. ‘But they offer long-term advantages. Home owners and tenants will be treated more equally, house prices will become more stable and the tax on work and other income will come down, so that households can spend more on other things beside their living costs.’
The economists also argue that the government’s new strategy to regulate the rent of a much bigger proportion of the rental housing stock is not without risk.
‘It may improve affordability in the short term, but it will not tackle the structural shortfall in affordable rental housing,’ they state. The same also applies to the government’s plan to build more temporary housing, they said.
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Source: Dutch News