Netherlands review their Housing Act
New legislation for the largest social housing sector in EuropeBrussels, 27 March 2015 | Economy
Following a review process that had started a decade ago, the Dutch senate approved in the beginning of March the new Housing Act. The new legislation for the social housing sector in the country will be gradually put into force in 2016 and aims at clarifying the status and role of social housing bodies after they had become financially independent from the state in the’90s.
Since then social housing providers started having a wider social role and more entrepreneurial freedom. Neighbourhood activities and care services were added in their mission while they started investing in middle segment rental and home ownership, too. According to the European Commission the separation between social and other activities was not clear enough. Furthermore, the Commission restricted some social activities and required to lower the income ceiling for social housing to remain Services of General Economic Interest (SGEIs) and eligible to state aid. On top of that some incidents of miss-management in the recent years put the sector in the firing line leading to a parliamentary inquiry.
This rather complicated background created the need for a new Housing Act that consists of 6 main pillars:
- Definition of Core Tasks
- Definition of other- non SGEI- tasks
- Performance agreements with local authorities and tenant organisations
- Separation of SGEI and non SGEI activities
- External Supervision and Emergency Fund
Definition of Core Tasks
The new law requires 80% of annual new social rentals to be allocated to households with annual gross income of max. 35.000 Euros. Social dwellings are regulated dwellings with a monthly rent up to 710 Euros/month (2015). Social housing associations are allowed to build public purpose buildings such as youth centres; libraries etc. and invest in neighbourhood services provided that they are located in the same area with their dwellings. Housing investments related to care and elderly services and in sustainability and energy efficiency of social homes are also encouraged.
Definition of other- non SGEI- tasks
These non-SGEI investments, for which no state aid is available, are only allowed if they follow a strict market test. Municipalities may ask housing providers to perform certain investments that a) are not done by other market players b) have a certain minimal return and c) are approved by the authorities.
Performance agreements with local authorities and tenant organisations
The relationship with tenants and municipalities is reinforced. Both will get more involved in the policies of housing bodies.
Separation of SGEI and non SGEI activities
According to European Commission SGEI Decision these activities must be separated within the each housing association. The new regulation offers two options: a) through administrative separation of all assets, liabilities, costs and revenues or b) through a legal separation that will actually create two separate legal entities. Smaller organisations with an annual turnover below 30 million Euros have lighter separation requirements.
Regarding the internal governance, members of the board and of the supervisory boards will have to follow fit-and-proper tests. Furthermore, they are not allowed to combine their board function with certain other functions, e.g. at other housing bodies or local authorities to avoid conflicts of interest.
External Supervision and Emergency Fund
A new external housing regulator will be established to assess financial and social housing policies as well as the management of social housing associations. It will also monitor the level of SGEI compensation.