Amsterdam Housing Market Gets Some Help From Dutch Government

(Bloomberg) -- With Amsterdam's housing shortage driving many of its residents out of the city, the Dutch government has decided to do something about it -- including capping rents.

On Friday, it signed a long-term housing deal with the Amsterdam metropolitan area to prevent tenants from being priced out of their neighborhoods, promising unspecified investments and tweaks to the law.

Dutch Interior Minister Kajsa Ollongren and Amsterdam mayor Femke Halsema are joining forces to keep the housing market affordable, after the median home price in the Dutch capital soared 80% in the past four years to €448,000 ($505,000).

Housing policy in the Netherlands is partly decentralized, with local governments responsible for ensuring supply and the national government for affordability. Now, amid inadequate supply and sizzling housing prices, the parties are looking to tackle the issue together.

“It is unacceptable for us that middle-income people are pushed further and further out of our region,” Halsema said at a ceremony to unveil the deal. “This housing agreement opens the door to new measures, a step forward for middle-income folks to obtain a house.”

Although housing market problems are not unique to Amsterdam, pressure has intensified in the Dutch capital as it has drawn increasing numbers of people fleeing Brexit and as investors have bought up properties to convert them into rentals.

Also read: Berlin Risks Return to ‘Poor, But Sexy' Era With Rent Freeze

The new plan would give the Amsterdam region instruments to fight excessive rent increases, including a so-called emergency button triggering caps when they've risen too fast. The minister will propose new regulation for holiday rentals through sites like Airbnb Inc. The officials will also explore the possibility of a ban on rentals in newly built homes to keep landlords from snapping them up, pushing middle-class buyers out of the market.

The plan for Amsterdam is the fifth such deal by the Dutch government to address housing shortages. It has unveiled similar customized proposals for Groningen, Eindhoven -- home to tech companies as ASML Holding NV and NXP Semiconductors NV -- Utrecht and the Randstad, which includes Rotterdam and The Hague, the country's political capital.

The measures unveiled are among many the country has announced to address the issue. The Netherlands has a plan in place to encourage real-estate developers to build on average 75,000 houses a year in the country, which has drawn criticism from industry players who say it's too little and too late to provide any real relief in the short term.

Additionally, the shortage of construction sites and skilled workers means the annual national target isn't feasible for the time being, according to the Dutch home-builders' association NVB. Investors say rising construction costs and land prices mean returns are low. Construction costs in Amsterdam have risen 25% over the last two years.

“I would also be a bit worried if I were an investor with construction costs rising so dramatically,” Laurens Ivens, the city official in charge of housing, said in an interview at Amsterdam's Bijlmerbajes, a former jail transformed into a residential building, located a few blocks from Koninklijke Philips NV's headquarters.

The new plan also aims to put in place a long-term partnership to develop new funding options for sustainable urbanization and a transport system. Ollongren and Halsema said they will “not shy away from unorthodox measures” in addressing those issues. They said the size of the investments couldn't be disclosed, adding that “the current system is less agile than desired.”

Related stories:
Amsterdam Reviews B&B Rental Ban in Certain Neighborhoods
The Unbearable Bounty of Brexit Plagues Amsterdam Homebuyers

--With assistance from Ruben Munsterman.

To contact the reporter on this story: Ellen Proper in Amsterdam at eproper@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Vidya Root

©2019 Bloomberg L.P.