Minister De Jonge of the Ministry of Housing and Spatial Planning has submitted a bill that includes, among other things, the option for municipalities to give their own residents priority when buying a house. Furthermore, municipalities will have additional leeway to give priority to people in crucial professions, such as nurses, police officers, and teachers.
Housing Act 2014
The Housing Act of 2014 already provides instruments to restrict freedom in the distribution of housing. Limitation is only possible if it is necessary to serve the general interest, such as preventing undesirable effects of the housing shortage. The current law sets out the conditions under which these instruments can be used. In this regard, municipalities are given the opportunity to establish regulations regarding the distribution of housing in the housing regulation. The proposed amendment to the law specifically relates to giving priority to residents of the relevant municipality based on local ties.
Amendment to the Housing Act
The minister has already sent a bill to the House of Representatives to amend the Housing Act. If the House of Representatives and the Senate approve it, the amendment is intended to come into effect on either January 1, 2023, or July 1, 2023. There are several reasons why municipalities are given more leeway to assign half of the existing homes for sale up to the NHG limit of €355,000 (2022) with priority to their own residents.
Housing Market Tightness
The housing market is extremely tight, and first-time buyers who want to live in their own village often do not get a chance to do so. For example, people from outside the municipality come in and buy a house by significantly overbidding. Seniors also often do not get a chance to buy a smaller home or apartment in their own municipality. Minister De Jonge believes it is essential to maintain the vitality and livability of the region. Therefore, it is of great importance that residents can continue to live in their own municipality when they want to move. By amending the Housing Act for this purpose, municipalities have the flexibility to give their own residents a priority.
50% of Homes for Local Ties
The new Housing Act dictates that municipalities can decide to give their own residents priority for 50% of the supply of homes for sale. Within that 50%, it is also possible for municipalities to use a percentage to give priority to people with social or economic ties. In addition, municipalities are free to designate certain professions as crucial.
What About Selling Your Own Home?
The downside of the bill is that homeowners with restrictions will have to deal with it. It is no longer possible to sell the house to the highest bidder. In practice, a homeowner may have to accept a lower offer when selling the house to a resident of the municipality. A higher offer from an investor or someone from outside the region may not be accepted. Peter de Groot of the VVD has expressed disagreement with the entire content of the bill, especially because it affects the freedom of homeowners when selling their own homes. According to this party, the preference is to expand priority for their own residents when it comes to new construction houses. The coalition parties do not seem to be in agreement on the amendment to the Housing Act, as the VVD wants to exempt homes for sale.
Effect on Housing Prices
The bill limits part of the market for homes for sale. This can have an effect on housing prices, but the government assumes that the effect on housing prices is likely to be limited. Municipalities have the freedom to give their own residents priority, but they are not required to do so. Furthermore, it only concerns homes for sale up to the NHG limit, and these homes are usually intended to be bought by people with low to moderate incomes.
No Solution to the Housing Shortage
Minister De Jonge has stated that the amendment to the Housing Act is primarily intended to serve as a temporary measure in the current housing market. The real problem, of course, is the shortage of homes. There is much more demand for both rental and sale homes than the available supply. The amendment to the law is not intended to solve the housing shortage but rather to give priority to residents of municipalities. On the Wadden Islands, such a measure is already in place because many homes there were bought by outsiders for use as vacation homes. This threatened the livability of the islands, so it was decided to shield a limited portion of homes for sale for residents. The Wadden Islands have a higher limit for homes for sale than is described in the bill. There are also other municipalities that already negotiate with developers for new construction projects to offer homes first to potential local buyers.
When Will the Amendment Take Effect?
First of all, it is a question of whether the proposed amendment to the Housing Act will go through, as both the House of Representatives and the Senate have yet to vote on it. Moreover, it has become clear that the VVD, through its member Peter de Groot, disagrees with the part about giving priority to residents in the allocation of homes. If the House of Representatives and the Senate approve it, the amendment will come into effect in 2023. It depends on when the vote takes place whether this will be on January 1, 2023, or later next year on July 1, 2023.
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