Measures to restrict mortgage lending brought in following the financial crisis of 2008 have had the unintended effect of stoking the private rental market, a report by economic planning agency CPB has found.

Between 2013 and 2019 the number of privately owned rented houses grew by 70% compared to the number of owner-occupied homes.

One-fifth of this growth can be attributed to new rules that limited the amount households could borrow for a mortgage. In 2008 a household earning twice the median wage could spend 36.8% of their income on mortgage repayments, but 10 years later this figure was down to 24%.

The rules were introduced to bring down the Netherlands’ historically high levels of mortgage debt, which had fuelled a dramatic rise in house prices to 2008

In the following five years house prices slumped by 20%, but between 2013 and 2022 they grew by 91%, accelerating during the pandemic shutdown.

With househunters able to borrow less, the balance tipped in favour of private investors who then rented out the properties to people who were unable to afford a house for themselves, the CPB said.

Around one in four tenants in the private sector did not earn enough to finance a mortgage on a comparable sized house.

“Buyers were able to offer less, which gave investors more opportunities in the market,” Emile Cammeraat, who oversaw the report for the CPB, explained.

Restrictions on investors

The CPB said measures to deter investors from the market, such as obliging people to live in houses they buy or raising taxes on rental income, would have a limited impact.

In some cases they could force people who wanted to rent into buying a home if fewer rental properties were available.

Raising the limits on borrowing would not be effective either, as this would mainly serve to drive up prices, the CPB warned. The best way to make houses more affordable is to build more of them.