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Housing Perspectives

Research, trends, and perspective from the Harvard Joint Center for Housing Studies

What Can We Learn from the Dutch Social Housing System?

Because housing affordability has proven to be an ongoing challenge in the United States, there is renewed interest in European-style social housing. While the German, Swiss, and Viennese models are often cited as exemplars, the Dutch model may prove most relevant to US initiatives. In the Netherlands, non-profit housing associations (called woningcorporaties) own two-thirds of the nation’s rental units, housing almost 30 percent of households for an average rent of €561 (about $600) per month. In contrast, in the US, private entities own almost all rental units in the US: record numbers of renters are paying more than 30 percent of their income on housing, the number of units renting for less than $1,000 dropped from 27.5 million in 2011 to 21.1 in 2021, and near-record numbers of renters are cost-burdened.

In my new paper, “The People’s Housing: Woningcorporaties and the Dutch Social Housing System - Part 2: The Mechanics,” I examine the Dutch system, showing how its design enables housing associations to sustain their operating budgets with rental income and self-finance new social housing developments. In an earlier paper, I described the evolution of this more than century-old system; in the new paper, I examine the institutional structure, governance relationships, and financing mechanisms that characterize the Dutch system, which I believe could prove inspirational for other countries looking to address affordable housing crises.

The new paper draws on printed materials, most of them in Dutch, and over twenty interviews with professionals in and around the social housing sector to examine questions in three broad areas:

  • Institutional structure: What is a housing association; what types of businesses do they run; and how are their social duties defined?
  • Governance: How is the public sector able to influence this housing when it does not have direct control over the housing associations?
  • Financing: What do the housing associations’ operational budgets look like; what indirect subsidies do they receive, and how do they finance new social housing developments?

Each section documents how the government and the woningcorporaties have developed a system that balances financial and social objectives. Taken together, the sections show how the Netherlands has created a self-sufficient affordable housing system with capacity and agency. The system’s key components include the following:

  • Decommodification: Because a significant portion of the housing stock is kept off of the market, this housing is insulated from rising prices. Investments in social housing keep generating income, which pays into a revolving fund used to cross-subsidize new development projects.
  • Scale: In the Netherlands, social housing is a mainstream housing option and not just a safety net. The housing is open to households with a wider range of incomes, which makes the neighborhoods more diverse and less likely to have (or be perceived as having) problems associated with concentrated poverty.
  • Relationships: With 284 housing associations throughout the country, the government has a network of local affordable housing specialists, which it can mobilize when problems occur. Instead of direct control, there is collaboration between the public and social sectors, a relationship cultivated by the enduring presence of housing associations in Dutch society for over 100 years.
  • Quality: High regulatory standards, aligned financial and social incentives, and financial capacity create a situation in which housing associations invest in high-quality architecture and maintenance, to the benefit of their tenants.
  • Indirect Subsidies: There are no direct subsidies for social housing, and the indirect supply-side subsidies (land discounts and loan guarantees) do not impose substantial costs on the government. Likewise, the demand-side subsidy (rental assistance for low-income households) pays only the difference between social rent and what households can afford. As a result, in 2021, an average of only €208 was needed per qualifying household.
  • Lending Terms: Long-term, low-interest loans are the foundation of the Dutch social housing system. Nearly half of new loans to housing associations have 40-to-50 year terms, and, as of 2022, the sector’s outstanding loans had a blended 2.84 percent interest rate.
  • Ease of Access to Capital: Housing associations borrow based on the value of their portfolio, not on the cashflow of the proposed development. In effect, they have an open line of credit, which makes financing new developments reliable and easy.

Taken together, these elements create a social housing system that demonstrates both the feasibility and the long-term benefits of social housing as an affordable housing model. The Dutch system is not without its faults, but it has proven to be resilient, dynamic, and adaptable to changing times. And while the Dutch system could not simply be transferred to other contexts, it could shape and inspire novel approaches to the pressing problem of housing affordability in the US.