Abolish subsidies on rent and reign in reckless housing corporation bosses, says Annemarie van Gaal.

The housing market is in deadlock. On the one hand, we have more than a million home owners who would face considerable residual debt were they to sell up now. This is stopping them from moving. On the other hand, is a rental market with as much as half a million people whose income is too high in relation to the rent they are paying. These people aren’t moving either and are blocking the housing market.

I want to talk about the rental market. The Netherlands has three million rental properties, of which 2.8 million are given over to rent-controlled social housing owned by housing corporations. These homes are meant for people on low incomes. The Dutch rental market has the largest percentage of rent-controlled properties in the EU. Only Slovakia scores higher, but there the rental market represents less than 3% of the total housing market.

Once you’re in a rent-controlled property, your income can go up to €43,000 a year. If you earn more you should, by rights, move to the private sector or buy a house. If you don’t you are a ‘scheefwoner’, a tenant who is out of sync, so to speak.

Research has shown that no fewer than one in six social housing units are rented out to people who earn more than the designated amount. This is not illegal and it happens in the best of families. Even former GroenLinks MP Tofik Dibi, who is now on 80% of his generous €120,000 wage, lives in a rent-controlled property and thinks there is nothing wrong with it whatsoever.

Too big for their boots

The draft bill to slap an extra 5% rent increase on people who earn more than €43,000 has been rejected by those same politicians. The tax office is not allowed to pass on data on income to the housing corporations. Privacy, don’t you know.

But extra income for housing corporations from tenants doesn’t mean more tax income for the state. This is because housing corporation tax deals are extremely comfortable. The money goes straight into the deep pockets of the housing corporations themselves who use it to hike executive salaries.

One in three housing corporation directors earns more than the Balkenende norm (€193,000 in 1211). Even corporations so small that any accountant could do the books on a Saturday afternoon have directors on half a million euros a year.

Apart from receiving golden goodbyes worth millions of euros, housing corporation bosses are frequently too big for their boots. They dabble in derivatives and pocket a personal perk or two along the way. These are scandals which run into billions. Meanwhile money pours into the housing corporations; money which should go to social housing but doesn’t. We have no other option than to protect the housing corporations from themselves.

Abolish rent subsidy

My proposal is to abolish the whole circus of rental subsidies. Right now, many tenants qualify and it’s costing the state €2bn a year. Instead of this subsidy I propose a ‘National Rent Guarantee’. And, wait for it, it will be administrated by the housing corporations.

All rents will be adjusted to market value and every tenant who pays too much in relation to his income will be eligible for an allowance from a housing corporation on showing his pay slip. Of course, agreements with the corporations will have to be crystal-clear and the local authorities would have oversee their proper implementation.

Result: a housing market that’s moving again, fewer government rules and  €2bn and part of the apparently much too high corporation profits in the kitty. 

Annematie van Gaal is an entrepreneur and the head of publishing company AM Media. She is also a writer and television personality.