Policymakers in the Netherlands are discussing ways to tackle the housing crisis to ensure growth in affordable housing. While this is, in principle, good news, the newly proposed measures raise some concerns and questions - on reasonable grounds: they boil down to being seemingly cosmetic short-term fixes with the risk of being counterproductive in the mid-to-longer run. In light of this, the aim of the following article is to unfold and highlight the significance of the private-rental sector for student housing – a segment of the Dutch housing sector that risks being undermined and threatened by the latest policy developments.

The Netherlands as a Poster Child for Higher Education and Talent Attraction
Over the years, the Netherlands has been allocating significant resources to professionalise and internationalise its higher-education sector. This allowed its universities to climb up rankings at an impressive pace such that by now the Netherlands is known as one of the worldʼs leading countries for high-quality, as well as internationally-oriented, research and university education. It is therefore not surprising that the Netherlands became a coveted study - as well as work - destination. Nevertheless, despite being a success story, the persisting magnetic pull of the Netherlands revealed a structural weakness which had been brewing undisturbed: housing – or a lack thereof, to be exact. Indeed, higher-education and immigration policies were not being aligned, let alone supported with the devisement of a resilient housing strategy. It is this uncoordinated approach across policymakers that we refer to as ʻsilo thinkingʼ.

In line with the above-painted picture, the below news headlines put the spotlight on the Dutch higher-education system and expose it as a giant with feet of clay. It stands to reason that the ever-increasing shortage of student housing and the persistently rising rental prices (as evidenced by the latest Kamernet Report ^[1]) are at least partial symptoms of a silo thinking by stakeholders, like policymakers. Djordy Seelmann, CEO of HousingAnywhere and Kamernet, summarises the issue at hand and prompts the need for a holistic approach - hence, a move away from silo thinking:‍

“Whether youʼre  a university, a  politician, somebody in  the administration of  the city; you need to know that education and accommodation are a whole. If you offer  on-campus education, then you need to think about both; you need to act upon where people are going to live.”

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Dutch Student Housing
According to data from the Dutch National Student Accommodation Monitor,^[2] there is currently a shortage of almost 27,000 student-housing units. As the country as a whole struggles with a severe and persistent housing crisis, housing for students and young professionals has become particularly troublesome. Worryingly enough, Kences’ research suggests that the student-housing shortage has not yet reached its apex. It is in fact expected to increase to a total of 44,800 units in the 20 largest Dutch university cities by the academic year of 2029/30. To address the problem, the government has launched a student housing action plan aimed at providing an additional 60,000 affordable student homes between 2022 and 2030. As much as we welcome this ambitious plan, several hurdles remain. In the following paragraphs we will attempt to paint a clearer picture of what these are - especially in the context of the understated, and too often underrated, role played by the private-rental sector in student housing.

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Private-Rental Sector for Students‍
Strikingly, about half of all students in the Netherlands currently live in housing offered by the private-rental sector;  thus, evidencing the vital role private rentals and property owners play in facilitating housing for students. Against this backdrop, it is highly concerning to see the private-rental sector shrinking. In fact, data from our brand Kamernet, the Netherlands’ largest classified marketplace for student housing offering predominantly private rentals, displays an alarming trend (see graph below): by 2022 we have witnessed a 39% decline in the supply of student housing originating from the private-rental sector (proxied by the development of the respective number of published listings on Kamernet) across the country compared to pre-Covid 2019. In light of the above, it is only natural to wonder what is behind this development. We suggest that the troublesome decrease in supply can at least partially be deciphered through the analysis of two distinct, yet interrelated trends that we will analyse in the following:

1. The Netherlands already presents one of the most tightly regulated housing markets in Europe, both nationally and regionally. Recent government plans and actions to further regulate rental housing may have the undesired effect of making renting less attractive for private landlords, in turn reducing supply and leading to rising rental prices.

2. The macroeconomic conditions and outlook are powerful contributors when it comes to making the sector even less attractive for investors.

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Local regulations limit private-rental supply for students. Municipalities have been particularly active when it comes to devising housing market-related policy. Notably, their efforts have been predominantly aimed at implementing measures to increase the supply of owner-occupied starter homes. For example, the introduction of buy-out protections, self-occupancy requirements, the reduction of the maximum number of people allowed to live in one rental home, and other so-called anti-speculation measures are worth mentioning. Furthermore, the process to obtain building permits is slow, having to account for a two-year average waiting time in light of the high number of objections filed and municipalities being understaffed to grant the permits in time. Among others, all of these measures disincentivized new supply of rental housing by creating a difficult-to-navigate situation for investors, developers and landlords alike. Moreover, measures are still piling up. Rotterdam, for instance, recently announced the introduction of a rental ban (and rental permit requirements) in the Carnisse district as of July 1, 2023.^[3]  

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Proposed national-level rent regulations heighten the risk and macroeconomic conditions don’t make matters any easier. On top of the above-mentioned measures that have already been implemented on the local level, forthcoming policies with the aptitude to further disrupt supply are being discussed on the national level. While renting should become affordable, the currently-debated measures that shall become active in 2024, risk having the opposite of the intended effect. Notably, with a large part of the rental-housing sector that shall be brought under strict rules of rent protection, the tax rules for housing investors and landlords have been stiffened. As a consequence, investing in rental properties is not only less profitable, but could result in losses. Hence, many private landlords are unsurprisingly compelled to sell their rental properties.^[4]   Indeed, the trend is already ongoing: The number of available rental properties in the private sector has been reported to be rapidly declining.^[5]    This is daunting, considering that these private landlords provide by far the largest share of housing for students in the Netherlands.

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At the same time, the Dutch government is taking commendable steps to tackle the issue of student housing, in particular through its intentions to update the housing valuation system (WWSO, woningwaarderingsstelsel voor onzelfstandige woonruimten). While this is a notable development, it is crucial to proceed with caution: First, the existing system dates back to 1979, and solely revising it might neglect (or at least underrepresent) new living concepts that live up to today’s students’ needs. Second, the ongoing debates on national housing market reforms together with local measures and WWSO revisions raise compatibility concerns. There is in fact a risk of creating a complex web of multiple layers of measures that clash or undermine one another.
Notwithstanding the above, the recent fall of the Dutch government can imply that politically-sensitive bills, like the affordable rental bill, are deemed ‘controversial’. As a result, measures may not be addressed (until a new cabinet assumes office). In any case, on top of the gloomy regulatory prospects, the current macroeconomic context only seems to make matters worse: Financial market dynamics such as high inflation, rising interest and mortgage rates, further undermine financial returns, hence aggravating the rental-supply situation.

The regulatory and macroeconomic picture painted prompts behavioural changes in investors. As predictability plays a key role in investor behaviour, continuously changing and stacked regulations make the sector less appealing. Notably, the accumulation of both national and local regulations together with the current market situation imply that more and more projects may become financially unfeasible. Hence, an unpleasant side effect of the current context is that private investors become more cautious in weighing investment opportunities on the housing market. This, in turn, halts new constructions.^[6]

In short, the above-highlighted local and (potential) national regulations for rental properties combined with the macroeconomic outlook and tax measures, are at the root of the decline in rental-housing supply in the Netherlands. They will likely lead to a further deterioration of what is an already dire situation in many student cities.

Similarities Across the European Market‍
Although the situation in the Netherlands is daunting, it is not the only country grappling with decreasing rental-housing supply. Similar tendencies and challenges regarding housing for the young - students and professionals alike - can be detected in other markets as well. In Italy and Germany, for instance, HousingAnywhere’s data suggests comparable supply developments at an accelerated pace: In 2022 compared to 2021, Italy has seen an average 8% decrease in supply - and Milan is struggling with a 18% decrease (i.e., more than double the national average). Moreover, on the country level, Germany has seen an even higher decrease of 12% - with the capital city of Berlin showcasing a striking 22% decrease. The Berlin example is particularly insightful and thought-provoking considering that supply spiralled as a consequence of a rent- price regulation (comparable to the measures proposed in the Netherlands). Despite being a short-lived rent regulation, introduced in 2019, its six-month lifespan implied a 60% decrease in supply and a worrisome 23% increase in rent prices.^[7]  Similar to these observations based on HousingAnywhere’s data, several sources are reporting that the UK is facing an unprecedented student-housing shortage. While this issue has been ongoing for years, the situation is becoming more urgent. With the supply of new PBSA and private rentals slowing, the issue is exacerbating. ^[8]‍

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Time to Acknowledge the Interconnectedness of Policies and Stakeholders
It is commendable that both national and local policymakers in the Netherlands are devoting efforts to tackling the housing crisis. Nevertheless, measures ought to be balanced and shall take the undesirable side effects they may detonate (with respect to hindering supply), into consideration. On the one hand, we welcome initiatives such as the Good Landlordship Act (Wet Goed Verhuurderschap) that intend to combat undesirable rental practices and provide better protection for home seekers and tenants. On the other hand, the complex mix of currently proposed and implemented measures, may trigger compliant landlords to exit the market. In turn, this would constrain students and young professionals even further; ultimately harming the Dutch economy, as retaining young talent becomes increasingly difficult if the young have a hard time finding a place they can call home.

As matters stand, the high dependence of students and young professionals on private landlords is expected to remain. To ensure that these significant demographics are able to find housing away from their parents’ homes, policymakers shall promote a balanced and resilient housing market - a market that provides the young with options. Introducing incentives to counterbalance potential risks for landlords - along with other relevant stakeholders such as PBSA providers and housing associations - should be at the forefront of the political agenda. Spatial development that coincides with, for instance, project and/or operating subsidies as well as tax concessions for those investing in, developing, and operating long-term affordable rental housing are critical to encourage stakeholders to engage in the Dutch housing market and turn it around.

Considering the above, we believe that the student-housing shortage in the Netherlands can serve as a cautionary tale to countries like Spain, which currently try to position themselves as attractive destinations for international students and skilled workers: devoting efforts to adapting their housing market accordingly should be priority before reaching their tipping point. On a brighter note, Italy recently indicates that it understands the interconnectedness of the public-policy arena. While aiming to promote itself to international talent - including students - it is in fact showing willingness to address housing topics.^[9]

Seelmann points out that “It’s important that universities have conversations with the city council and say, ‘we want to grow as a university or as a group of universities, we want to attract more international students, where are we going to house them?’”. The maybe obvious and yet powerful takeaway is that stakeholder collaboration is what is needed to promote successful higher-education and talent-acquisition strategies in a sustainable manner.

If you are interested in learning more about our organisations, visit our web pages here at HousingAnywhere and Kamernet.

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^[1] KamernetVerhuurrapportage 2022

^[2] JaarlijkseLandelijke Monitor Studentenhuisvesting 2022, https://www.kences.nl/lms/

^[3] 'Malafide huisbazen in Carnisse wordengedwongen om hun huren te verlagen' (Rijnmond, 17.05.2023)

^[4] ’Verkoopgolf woningen in vrije sector doorhuurregels De Jonge’ (Telegraaf,23.01.2023)

^{[5] ’}Tekort huurhuizen vrijesector stijgt snel, maar kabinet wil koers niet wijzigen’ (NOS, 13.06.2023)

^[6] ‘Woningtekort loopt op: Beleggers krijgenprojecten niet meer doorgerekend’ (VGJ, 14.02.2023)

^[7] Residential investment market at historicturning point.Learning from Other Countries (CBRE, 2022)

^[8] ‘The UK student housingmarket: what are the issues we want to examine further?’ (The Class Foundation, 20.03.2023); ‘UK Student housingreaching ‘crisis point’ as bas as 1970s, charity warns’ (The Guardian, 26.12.2022); ‘UK: Student housing is the bubble that won’t burst’ (FT, 01.12.2022)

^[9] 'Italy turns hotels into student halls to battle demographic decline' (Times Higher Education, 22.03.2023)

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