The tax break on mortgages should be phased out gradually over 30 years, rather than scrapped for some new mortgages, according to recommendations drawn up by home owners lobby group VEH, housing corporations and tenants’ groups.
The Dutch system is currently one of the most generous in Europe, with interest fully deductible for 30 years. The central bank, financial services watchdog and other bodies have called for change, arguing the collective Dutch mortgage debt makes the economy vulnerable.
In addition, social housing rents should rise in line with inflation plus two percentage points on an annual basis, the organisations say in a report on how to kick-start the housing market.
The aim of increasing social housing rents is to encourage the better-off to leave cheap rental housing and either move into the non-rent-controlled sector or buy a home. Low income families would receive higher housing benefit in compensation.
According to the Volkskrant, which published the plans, it is the first time the three interest groups have worked together to try to solve the housing market problems. The report has been 18 months in the making.
House prices in the Netherlands are dropping and fewer homes are changing hands due to the economic crisis and tougher mortgage rules from the banks. Changes to mortgage tax relief are likely to be central to the forthcoming election campaign.