Social housing makes up 29 percent of the total housing stock in the Netherlands. These social units, which in 2022 rented for an average of €560 per month (or about $600), are noteworthy because of the decentralized network of 284 independent, non-profit housing associations (called “woningcorporaties”) that build, maintain, and operate the country’s social housing.

Surprisingly, the Dutch housing associations—whose portfolios range from 400 units to over 80,000 units—do not receive any direct subsidy from the government to fund their activities. Instead, their operations are sustained by revolving funds of rental income. Excess rental revenue together with long-term loans and equity from unit sales fund new social housing construction. These features of the Dutch social housing system—that it is a decentralized system of non-profit organizations independent from the state; that they own almost one-third of the country’s housing and keep it off of the market; and that the system requires no direct state subsidy—make this system a fascinating case study for countries around the world looking for new models to address affordable housing crises.

In “The People’s Housing: Woningcorporaties and the Dutch Social Housing System,” a new Center working paper, I explain how the modern system came to be. In a second, forthcoming paper, I will take a look under the hood, unpacking how the Dutch social housing system’s institutional structure, governance, and financing work together to provide affordable housing without direct subsidy. Informed by over twenty interviews with professionals in and around the social housing sector, the two papers describe a complex and dynamic system that is under-documented in English. My hope is that together, the two papers will make the innovations of the Dutch social housing system accessible to a broader, international audience.

As the first paper illustrates, housing associations began as member-based philanthropic associations in the late nineteenth century. Wealthy philanthropists sold shares that funded the construction of working class housing, and they used excess rental profits to fund further construction. The Housing Act of 1901 formalized these endeavors, replacing shareholder capital with long-term, low-interest government loans for housing associations. In exchange, housing associations had to become non-profit organizations. With access to a line of credit from the government, the number of housing associations and the scale of their activities began to grow.

After World War II, when many housing units were destroyed, a serious housing shortage required construction on an unprecedented scale. The government turned to the housing associations, treating them as an extension of the public sector. In addition to loans, the government provided operating subsidies so that the housing associations could build beyond the capacity of their revolving funds. Due to this period of heavy investment, social housing accounted for approximately 37 percent of the total housing stock by 1970.

As the housing crisis calmed, subsidies became less necessary. From the 1960s onward, housing associations were pushed towards independence. In these years, new financial instruments were created that decreased housing associations’ dependence on subsidies and loans from the government. Independence was made final in 1995 when the housing associations’ remaining debts to the government and expected subsidies from it, roughly equal amounts, were cancelled out against each other. This final move severed the last financial ties between the housing associations and the government.

In the first years of independence, housing associations experimented to figure out how they could fulfill their social mission without public support. Acting somewhat like Robin Hoods, they mobilized their portfolios, built market-rate housing and joined private-sector development schemes, then used the profits to subsidize social housing development. However, not all experiments were successful. Amidst some scandals, bad investments, and a mandate from the European Union, the sector was reregulated in the 2010s to bring it back to its “core task” of providing affordable housing.

As a result of the new regulations, housing associations were forced to improve their operations. Today, housing associations are in strong financial positions and have seasoned leadership. They mobilize portfolio-based financing, long-term guaranteed loans, and strategic sales to build, maintain, and rent affordable and quality housing. And, in the face of the current housing shortage, the Dutch government is once again loosening the reins so that housing associations can expand their capacities and rise to the challenge. While there are still improvements being made, the Dutch social housing system is powerful precisely because it has proven resilient throughout its history, and it continues to adapt to meet the challenges of its time. As countries around the world struggle to meet affordable housing needs, the story of the Dutch model could inspire new approaches to the institutional structures that facilitate affordable housing development.