Sep 26, 2023 at 7:59 AM Update: 3 minutes ago
More tenants have been stuck in expensive rental properties in recent years as mortgage standards have become stricter. They could no longer buy a house and therefore had to rely on expensive rental properties. The landlords benefited from this, the Central Planning Bureau (CPB) notes.
The share of expensive rental properties has grown significantly. In 2009, 4 percent of all homes were private sector rental homes, but in 2018 this already applied to 9 percent of houses. According to CPB researchers, this is partly because households are allowed to borrow less for their mortgage.
During that period, it has been arranged that you can borrow less based on your income and in relation to the home value. This should protect home buyers against too high a mortgage that they will no longer be able to pay off in the event of a forced sale.
Due to the stricter lending standards, potential buyers dropped out and more owner-occupied homes went to investors, who could then rent them out for high amounts.
Strong connection between lending standards and choice between renting or buying
The CPB sees a strong connection between the tightening of lending standards and the choice to rent or buy. According to the researchers, the chance that households will continue to rent decreases by 8 percent if they are allowed to borrow 1 percent more.
The research also shows that a quarter of tenants in the private sector cannot afford a comparable owner-occupied home.
Relaxing lending standards has a downside
A relaxation of lending standards could ensure that owner-occupied homes are once again within the reach of tenants, the researchers say. But that can also be disadvantageous for starters. The downside is that demand is growing and the additional potential buyers are driving up house prices.
The self-occupancy obligation may be more effective. A home buyer must then live in the home for a certain period of time. This measure is already taking shape in some municipalities.
This makes owner-occupied homes less attractive to investors and more homes become available for tenants who want to buy. The disadvantage of this is that there may be too few rental properties available for people who would like to rent.
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