Cabinet and opposition parties reach agreement on housing market
Publication date 15 February 2013
The Cabinet and the opposition parties D66, ChristenUnie and SGP have reached agreement on reforming the housing market. The VVD and PvdA have thereby had to revise the original coalition agreement. The agreement reached with the opposition parties softens the harsher effects of the measures. This was necessary to ensure their adoption by the Upper House, where the VVD and the PvdA do not have a majority.
According to media reports, the agreement includes the following tax changes:
· To be eligible to deduct mortgage interest, new home mortgages must be fully repaid within 30 years as part of an annuity repayment scheme. In order to lower the monthly costs in the first few years, it will however be possible to take out a second mortgage for up to 50% of the property value and for a term of 35 years. The interest on this mortgage is not deductible.
· Housing associations will still have to pay the landlord levy, but the projected revenue has been adjusted downward to EUR 1.75 billion; it was initially EUR 2 billion.
· As of March 1, 2013, VAT on renovations and conversions of existing homes will be reduced from 21 to 6%. This reduction will, in principle, apply for one year.
· The maximum rent increase to discourage social housing being occupied at rents that are too low in comparison to the tenants income will not be 9%, but 6.5%.
· The rent level will not be linked to the WOZ value, as the Cabinet initially intended, but will be based on a points system.
· A fund of EUR 150 million will be set up for energy conservation.
· A fund of EUR 50 million will be set up for home starter loans; this was initially EUR 20 million.
· Tenants who suffer a decline in income may be eligible for a rent reduction.
· The conversion of vacant office space to homes will be encouraged.
· It will be made easier for institutional investors to purchase homes from housing associations.