Affordability

In their election platforms, political parties identify numerous areas for improvement. These can generally be grouped into three main themes: planning capacity, affordability, and the housing market system. In this second paper, we examine policy proposals focused on affordability in greater detail.

Most parties target two-thirds of affordable new construction.

Most political parties adhere to the affordability requirements set by the Housing Governance Strengthening Act (Wet Versterking Regie Volkshuisvesting). Under this law, two-thirds of all new housing built within a region must meet national affordability standards, with 30% reserved for social housing. This corresponds to a maximum monthly rent of roughly €900 (about $950).

These national targets build on existing local agreements. For instance, Amsterdam has applied the “40-40-20” rule since 2017, and other major cities have followed with comparable requirements. The shared goal: to keep the housing market accessible to low- and middle-income households.

Affordability rules hurt financial feasibility.

In practice, however, these rules often hold back the development of new construction. Due to the rising costs of land and construction, it is becoming increasingly difficult to deliver projects profitably within standard financial parameters. In many cities, particularly in the social and mid-rental segments, projects are simply not cost-covering.

The result is paradoxical: regulations intended to create more affordable housing often result in fewer affordable homes being built. This raises an important question: do these rules still serve their intended purpose?

According to earlier CBRE research, 62% of halted projects could be revived instantly by lifting the affordability regulations. In Amsterdam alone, this would translate into a 41% increase in housing production.

Is the current social housing stock sufficient and adequate?

Income data shows that around 3.7 million households in the Netherlands currently qualify for social housing. Of these, 1.2 million are homeowners, leaving roughly 2.5 million households dependent on (social) rental housing - about 30% of all households nationwide.

Currently, 1.6 million households reside in social housing owned by housing associations, 630,000 rent from private landlords, and 280,000 occupy non-self-contained social units, such as student housing. The social housing stock, representing around 34% of the total, is larger than the structural demand; yet, waiting lists persist. This points not to a shortage, but to a mismatch in distribution.

Acceleration through policy and allocation reform

Affordability standards thus create tension not only between policy and practice, but also between intention and impact. While demand for affordable homes remains high, production in that very segment is stagnating. Instead of more regulation, the focus should be on overhauling the framework itself. We can significantly accelerate housing delivery by loosening strict affordability mandates and making more innovative use of the existing stock - without compromising accessibility.

Achieving the goal of 100,000 new homes per year becomes feasible by focusing on:

• A more effective allocation of social housing

• Attracting private investors back to the housing market

• Setting local, needs-based affordability targets

• Reassessing the overall size of the social housing stock

1. Improve allocation within the social housing stock.

Income-based allocation is designed to ensure social housing reaches those who need it most. Yet, 19% of social housing tenants now exceed the income limit, meaning roughly 338,000 affordable homes are currently occupied by people who, in theory, could afford a mortgage or rent in the private sector.

Housing cost ratios confirm this: 13% of social housing tenants spend less than 20% of their income on housing. Without burdening them financially - and while staying within Nibud guidelines- it would be socially justifiable to guide these tenants toward higher rents in a gradual manner.

Only 40% of housing associations currently apply income-based rent adjustments, and even then, increases are capped by the official housing valuation system.

As a result, rents in major cities are often 20–40% below comparable market rates—effectively creating an implicit subsidy.

This has two significant drawbacks:

• Reduced mobility. Higher-income tenants are not incentivised to move into market-rate housing.

• Lower investment capacity. Housing associations collect less rent, leaving fewer resources for new construction, sustainability upgrades, or rent relief for tenants with high housing cost burdens (over 40% of income).

Furthermore, 52% of households paying over 40% of their income on housing occupy homes with at least three rooms per person. Encouraging people to move to smaller, better-matched homes could meaningfully lower their housing costs.

2. Make residential investment attractive again for private investors.

Alongside housing associations, private investors play a crucial role in providing affordable housing. They currently accommodate around 440,000 lower-income households.

However, recent tax changes (Box three: Dutch tax on assets) combined with mid-rental regulations, have triggered a wave of selloffs. Investors are exiting the market, shrinking the affordable rental supply. While this may temporarily stimulate the owner-occupied market, it primarily comes at the expense of students and young professionals, and soon, other groups dependent on affordable rentals will feel the same squeeze.

3. Fewer social housing units needed in the long term

Fortunately, the Netherlands has become far more prosperous over the past century. Dual incomes and robust pension systems mean that households today are less dependent on explicit or implicit government subsidies in the housing market.

This is reflected in the age profile of social housing tenants: Older generations (particularly those aged 75 and above) are overrepresented. In comparison, younger generations are far less likely to live in social housing -- suggesting that Dutch society is becoming more financially self-sufficient.

Given current prosperity and an ageing social housing population, the overall share of social housing should be recalibrated. Based on these data, a 25% social housing share by 2040 would be sufficient; down from today’s 34%. Consequently, the mandatory share of social housing in new developments could be reduced to 20–25%, depending on local circumstances and the scale of investor sell-offs.

The “cost-sharer rule” (kostendelersnorm) also impedes mobility: some couples deliberately maintain separate households to avoid losing benefits, artificially inflating housing demand.

4. From national affordability rules to local, needs-based housing targets

A more efficient allocation of social housing makes a smaller overall stock viable in the future. This also allows for lower social housing quotas in new construction -- 20–25% instead of the current 30%, adjusted for regional needs.

Targeted new development for seniors is essential to reduce under-occupation (“scheefwonen”). It provides suitable housing for older adults, improves care efficiency, and frees up affordable family homes for others. However, the exact need for senior housing varies strongly by region, meaning local targets are far more effective than national mandates.

Future seniors represent the wealthiest generation to date. Consequently, current affordability standards are not aligned with their preferences. Recent CBRE research indicates that they are prioritizing comfort and luxury, which often leads them to forgo downsizing from their spacious homes to "affordable" senior living options.

More intelligent allocation, quality housing for seniors, and local flexibility over national mandates

Several policy shifts are essential to both accelerate construction to 100,000 homes per year and restore long-term affordability to the housing market.

By optimizing the existing housing stock, re-engaging private investors, recalibrating total supply, and applying locally tailored solutions, the Netherlands can build a dynamic, resilient housing market -- one that meets its production goals while keeping homes affordable for all income groups.