Housing associations are having more and more problems with the financing of projects. The cabinet wants 900,000 new houses to be built in the coming years, of which 300,000 are rental properties. Housing associations play a crucial role here, but they are under pressure as a result of the rise in interest rates.
The housing associations intend to build 250,000 social rental homes and 50,000 homes in the so-called mid-rental segment. That goal is in danger, says FD journalist Erik van Rein. Mainly because of the high interest rates.
‘That causes problems for normal home buyers because they can borrow less from the bank. The moment that interest rate goes up, the monthly costs will also be higher.’ This also has consequences for commercial parties such as project developers and housing corporations. ‘Interest rates are higher and that is why they run into problems with the sums made on the basis of low interest rates. They have now suddenly risen.’
Construction costs
In addition, the high construction costs play a role. This combination of problems puts the construction of the houses in jeopardy. It is not yet clear what the exact consequences are. But there is no doubt that it will have an effect, according to Van Rein. ‘Perhaps not in the short term, but in the somewhat longer term because the investment plans run into problems when you have to deal with that interest rate.’
Housing associations want to borrow an extra 50 billion euros in the coming years in order to comply with the agreements made with the government. In that respect, the corporations are facing a ‘gigantic exercise’, says Van Rein. ‘They already have about 85 billion in loans outstanding. And at the same time they are on the eve of a construction boom.’
The cabinet is currently looking mainly at the housing corporations because the project developers are ‘making a retreat’, says Van Rein. ‘And housing associations form the basis of those affordable homes that the cabinet really wants.’ If those ambitions exist, then Minister for Housing and Spatial Planning Hugo de Jonge should step in. ‘But the question is what the cabinet will do now.’
Spring note
Last week it was announced in the Spring Memorandum that 250 million euros will be set aside to give construction an extra boost. But according to Van Rein, this is in fact not new money. ‘This comes from a jar that was in principle already intended for projects that do not actually get off the ground. Then the cabinet will have to look at other options, but they are not endless. As a cabinet you cannot constantly help.’
The situation only increases the already high pressure on the housing agenda of Minister De Jonge, says Van Rein. ‘The number of projects that have been approved is already considerably lower. In the short term things are still going well, but next year and the year after that you can expect that the government’s target of 100,000 homes per year in 2024 will not be achieved.’
Landlord levy
In addition, the abolition of the landlord levy also plays an important role here. Housing corporations complained bitterly about the levy. The abolition may offer some solace. ‘That has already earned them 1.7 billion euros.’ Incidentally, the corporations are also upset with a certain corporate tax that they have to pay, the FD journalist emphasizes. Yet he understands the problems of the corporations.
“They are tied to borrowed capital. They will have to borrow money because the rental income for the coming years is fixed, which is regulated. So to build the houses, they end up with the guarantee fund. But if interest rates rise, they will be in trouble.’
