Dutch Municipalities: Housing Incentive Scheme Comes to the Rescue of Housing Shortage

Woningbouw

The housing shortage in the Netherlands remains an urgent issue. Research has shown that around 300,000 people in the Netherlands are currently unable to rent or buy their own homes, despite having the explicit wish to do so. People over the age of 25 who still live with their parents, young professionals in anti-squat housing, people who live with another family—all are common examples of groups of people who would like to rent or buy their own homes, but are currently unable to do so. Because the houses are simply not available, or because they cannot afford those that are. Affordable housing is thin on the ground—a trend that, moreover, has yet to reach its peak in 2025. In addition, the issuing of fewer building permits due to the well-known nitrogen and PFAS problems has led to a decline in house building, hence further adding to the problem.

The Dutch Housing Incentive Scheme

The Housing Incentive Scheme is a grant programme for municipalities with the aim of accelerating the realisation of a total of 96,000 homes, accounting for 10% of the total requirement for the next ten years as set by the government.

The grant achieves this by supplementing the public financial deficit of housing projects. The public deficit is a bottleneck that municipalities often face. An interim evaluation of the Housing Incentive Scheme shows that the public deficit per house can amount to more than €12,000. For example, such a deficit may arise as a result of reduced revenues from an affordable housing programme, or as a result of non-recoverable costs for necessary measures to realise the project.

By making up this shortfall, the Housing Incentive Scheme also explicitly (but not exclusively) benefits the realisation of affordable housing for starters or people with a middle income. Sixty-five percent of the homes that receive support from the Housing Incentive fall into the “affordable” category.

In addition to the costs associated with the housing construction itself, necessary measures are also eligible. These include:

  • Infrastructural access to houses;
  • Reducing the nitrogen deposition in Natura 2000 areas;
  • Soil remediation;
  • Relocation of impeding activities;
  • Designing the public space; and
  • Making homes affordable.

The Application

Applications can be made by all Dutch municipalities.

Evaluation criteria are:

  • Necessity
  • Effectiveness;
  • Efficiency; and
  • Urgency

During the two previous rounds of the Housing Incentive Scheme, no less than 57 of the 100 applications received funding.

Conditions

For regions in which more than 75% of the municipalities are small (comprising less than 50,000 inhabitants), a minimum number of 200 houses per application applies. For other regions a minimum of 500 houses applies.

Other conditions are:

  • The application concerns a defined project area.
  • The realisation of the project has not yet started at the time of the application.
  • Construction should start within 3 years after the grant has been awarded, whereas the last houses should be realised within 10 years after.
  • One should be able to substantiate the public financial deficit met by the project. In addition, measures within the project must be public investments that are necessary for housing construction.
  • At least 50% of the total project costs must be financed by co-governments (i.e., municipalities, provinces, and water boards).
  • At least 50% of the housing units within a project must fall within the “affordable” category. This includes social housing; rental houses of max. €1,000 per month; and owner-occupied houses with a selling price below the Dutch NHG-cost limit.

Eligible Costs

The total budget comprises € 250 million. As mentioned above, the grant amounts to a maximum of 50% of total project costs.

Example

To give an example: A municipality submits a project involving 500 homes to the Housing Incentive Scheme. Per house in this municipality, there is a public deficit of €12,000. This results in a project with €6,000,000 in eligible costs. Taking into account a maximum subsidy of 50%, this results in a potential subsidy revenue of € 3,000,000.

Deadlines

The third application period of this scheme is opened from 1 September to 17 September 2021. The aim is to publish the results in December.

Are you planning a housing project with a public financial deficit? Feel free to contact us today in order to explore the possibilities.

 

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