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1.8 million Dutch households would rather be in a different housing situation
Buy or rent? The housing situation of 1.8 million households in the Netherlands does not match their preferences. This means they currently rent their home but would prefer to buy, or own a home but would prefer to rent. While home ownership is the most popular situation overall, there is also clear demand for rental homes.
Published: 05 September 2023
This is according to a study by DNB based on a survey of over 2,000 Dutch people.
Three-quarters of the respondents believe owning a home is financially more attractive than renting. If the housing costs of owning and renting were equal, 56% would prefer to own a home, whereas 21% would rather rent. The remainder have no clear preference. Preference without taking cost differences into account is referred to as intrinsic preference. The survey also reveals the reasons why people have an intrinsic preference for either owning or renting. Those who prefer to own a home cite independence and adaptability and consider their home a solid investment. Those who prefer to rent mention factors such as flexibility and the freedom from worries about maintenance and the value of their dwelling.
1.8 million households would prefer to be in a different housing situation
The housing situation of 1.8 million households in the Netherlands (22%) does not match their preference for owning or renting. For instance, 14% of homeowners would prefer to rent (see Figure 1), representing 8% of the total number of households. Of the tenants in the social housing sector, 31% (8% of the total number of households) would prefer to own. Among private-sector tenants, the figure is as high as 49% (6% of the total). The latter is presumably because rents in the private sector are unsubsidised and relatively high. The fact that buying a home is not a realistic option for some social housing tenants may influence their preferences.
Figure 1 - Housing preferences assuming equal housing costs
Note: Percentages based on 2,396 weighted respondents. Source: DHS/DNB survey.
Younger people prefer to own, whereas older people prefer to rent
Age plays an important role in preference for owning or renting. Respondents up to 45 years old are relatively more likely to prefer owning a home. Conversely, older respondents (65 and over) are relatively more likely to prefer to rent. Apart from age, housing preferences are not – or are only marginally – related to other personal characteristics. However, a preference for renting is more common among people living in urban areas.
Dutch people are willing to pay for their housing preferences
Thus, assuming equal housing costs, owning a home is more popular than renting one, but there is clear demand for both types of housing. A similar picture emerges when people are asked how much more or less they would be willing to pay in housing costs for renting or owning a home (all housing costs, excluding the repayment part of a mortgage loan). One in four respondents say they would prefer to own a home regardless of cost, while one in six would prefer to rent regardless of cost (Figure 2). For other groups, cost differences are determinative of their housing preferences. Again, younger people in particular say they are willing to pay substantially more to buy the home they want, whereas older people are prepared to accept higher housing costs to rent their home.
Figure 2 - Impact of housing costs on preference for owning or renting
Note: Percentages based on 2,396 weighted respondents. Source: DHS/DNB survey
Reducing mismatches benefits the economy
Households are more satisfied if their housing situation matches their preference. Reducing current mismatches will therefore increase well-being and boost a general sense of prosperity.
Housing availability and affordability depend on several factors. Examples include disparate tax treatment of home ownership and renting. Targeted policy measures can therefore help reduce housing market mismatches.
First of all, it is important that sufficient new houses are built to boost the supply of owner-occupied homes for the substantial group of households that currently rent but would prefer to own a home. In addition, a sufficiently large and well-functioning rental sector is important to serve the substantial minority who prefer to rent because of the specific features of rental properties. Moreover, a well-functioning private rental sector has macroeconomic benefits, because tenants will find it easier to move after finding a new job in a different region. Against this backdrop, it is important to monitor how the supply of rental housing develops and to ensure that new housing stocks include sufficient rental homes.
Secondly, narrowing tax treatment differentials between home ownership and private sector renting would help reduce housing cost differences. This would lessen the current distortion of housing choices caused by tax considerations. An additional benefit of phasing out differences in the tax treatment of home ownership and renting is that it would make renting more attractive for older people. This could free up more owner-occupied homes for younger tenants who would prefer to own a home.
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