The Dutch government needs to do more to boost the supply of affordable housing by removing obstacles that are holding back construction, the European Commission said in its latest recommendations for the Netherlands.

“The private rental market is relatively small, which results in a limited supply of affordable and available alternatives to buying a house,” the commission said. “The lack of affordable rental housing also undermines labour mobility.”

The government has set a target of building 900,000 new homes by 2030, most of which will be classed as affordable, but investors say high taxes and plans to increase rent controls are making new projects difficult to realise.

The commission has also reiterated its earlier concerns about the housing market, urging the government to further reduce the rate at which mortgage interest can be deducted from income.

The current high household debt makes households vulnerable to economic shocks, the commission said, and while some progress has been made, more still needs to be done.

Brussels also called on the government to tackle the self-employed sector, arguing that 28% of all workers in the Netherlands are on flexible or short-term contracts. The EU average is 13%.

In addition, the Netherlands must do more to boost its use of sustainable energy. Currently, just 13% of supply was considered to be green in 2021, compared with 22% in the EU as a whole, the commission said.