Housing market is insufficiently accessible
New construction is stagnating, waiting lists for rental properties are long and owner-occupied homes are becoming increasingly unaffordable. Since 1995, the price of an average owner-occupied home has risen from 5 to 11 times the average income in 2025. To buy a home at the average purchase price of €520,000 in 2025, a Dutch household would require an annual gross income of at least €107,000. However, only 37% of Dutch households currently have this level of income.
Nearly one million new homes needed
An increase in new-build homes that better match housing needs could improve accessibility to the housing market. To reduce the housing shortage to the target level of 2%, a study by ABF Research reveals that up to one million homes need to be built by 2031. However, the construction industry has been facing challenges for several years, including rising construction costs, a shortage of skilled workers, nitrogen regulations and an overloaded electricity grid, which have collectively led to a decrease in construction output.
Land price hinders new construction
Currently, almost 60% of the value of a home represents the land on which it is built, against 42% ten years ago. The price of land for development has also risen sharply, accounting for a large share of new-build development costs, up to 40%. This has made it more difficult to make housing projects financially viable. Municipalities are often forced to chip in, which reduces the resources available for public amenities and infrastructure surrounding new developments.
Imposing a fee on land value increase could help
Developments outside urban areas usually require upzoning, for example from agricultural to residential land use. Since the use of land largely determines its value, upzoning typically increases its value by a lot. A development impact fee is a levy on this increase in value and can be used to fund public amenities and infrastructure surrounding the development. This will discourage landowners from holding the land for speculative purposes, can dampen large increases in the value of development plots, and will shift the tax burden to less mobile capital, which makes more sense from an economic perspective.
Why this analysis?
The government is looking into the details of implementing development impact fees. Proposals were made as early as 2019, and the subject was included in the current coalition agreement. While the practical details depend on political, legal, economic and financial considerations, little attention has been paid to the financial aspects. We have therefore estimated the potential proceeds of development impact fees, depending on their rates.
Results of the analysis
We calculated that the increase in value that results from upzoning land from agricultural to residential use averages around €1.4 million per hectare. In the Randstad region, the increase is even greater at just over €2 million. To build some 70,000 homes outside urban areas every year, over 5,500 hectares of land must be upzoned.
If we multiply these figures, we arrive at the total increase in value. This taxable base, together with the fee rates, determines how much development impact fees could raise. According to our estimate, the nationwide taxable base, representing the sum across all 342 municipalities, is between €7 billion and €8 billion a year. The map shows how this amount would be raised across the Netherlands. These calculations are indicative and based on a number of assumptions. See our full DNB Analysis for more details (available in Dutch).