The senate narrowly voted on Tuesday night in favour of an extra tax on housing corporations after Labour senator Adri Duivesteijn agreed to toe the party line.

Duivesteijn, who opposed large parts of the agreement, agreed to vote in favour after housing minister Stef Blok said he would lower the tax after a couple of years if it turns out to have too many disadvantages.

The aim of the tax is to generate €1.7bn for the treasury by 2017 – an essential part of the cabinet’s efforts to generate €6bn to cut the budget deficit.

Housing corporations argue the tax will cream off too much cash intended for investment in new developments.

The main points of the agreement, including concessions made by Blok:

• Value-added tax on renovations will be cut from 21% to 6% for one year from March 2014
• Social housing rents will rise by a maximum 4%
• Housing corporations will pay an extra tax on their income to raise €1.7bn. The impact of the tax will be evaluated in 2016
• A special investment fund will be set up for the construction sector
• €50m will be placed in a special fund to help first time buyers
• Social housing tenants who suddenly lose income can apply for a rent cut
• The current points system will remain the basis for calculating social sector rents
• Institutional investors will be given greater scope to buy housing corporation properties