Affordability of student housing in Amsterdam

Affordability of student housing in Amsterdam

Published in Spanish as: Bosma (2014) Asequibilidad de la vivienda para estudiantes
en Ámsterdam.
Ciudad y Territorio. Estudios Territoriales. Vol. XLVI, 182, p. 755-760.
Affordability of student housing in Amsterdam
J. Bosma, ASVA Student Union, Amsterdam. December 2014.
Introduction
For students Amsterdam is one of the most popular cities in the Netherlands to live in. In last
decades the number of students living in the city has been rising. Today, 41.000 students live away
from their parents in different kinds of housing in Amsterdam. As a result of this continuing growth
there is a rather large shortage of student housing.
This short article deals about the current and future effects of the shortage of student housing,
focusing mainly on massive increases in rents making housing unaffordable for many students.
The next paragraphs provide some figures and factual information about the current market for
student housing in Amsterdam. The second section covers effects and developments on the
supply side of the market. The third section points at some consequences for the demand side, the
students in Amsterdam.
Shortage of student housing
In the past four years about 8.000 new student units have been built up. This is quite an
accomplishment, since construction of other types of housing have almost stopped since the
economic crisis. Despite that, the newly erected student housing is just enough to keep up with the
growth of demand. Until 2018 an extra growth in demand of 8.000 dwellings is expected (DUWO,
2014). In addition guesses have been made that there is a structural shortage of 9.000 dwellings.
This demand stems from students who decided to postpone their search for (affordable) housing,
and are now living at their parents or outside Amsterdam.
Housing expenditure-to-income ratio
It is not easy to straightforwardly say if housing is expensive. Students live in different kinds of
dwellings and pay a broad range of rents to their landlords. Their incomes vary as well. To
overcome this, housing expenditures can be compared to disposable income. This, then, shows
which part of the monthly income is spent on housing costs and gives us some insights in
affordability of student housing. A reasonable ratio would be about 30% according to the Nibud, the
National Institute for Family Finance Information (quoted in Boterman et al, 2013: 31).
Different sources show that the housing expenditure-to-income ratio for students is rather high and
has been rising a lot the past decade. According to Boterman et al. (2013: 32), people between the
age of 18 and 24 years in Amsterdam, including most of the student population, have seen a stark
rise in housing expenditures in the last decade. Whereas in 2001 they averagely spent 29 percent
of their income on housing, in 2011 this has increased to over 40 percent. Recent numbers by
Kences (2014), the industry association for social student housing providers, show students spend
up to 44% (for rooms with shared facilities) to 60% (for private dwellings) of their monthly income
on housing. The average rent of dwellings on Kamernet, a website offering privately owned rooms,
was €538 (2014) which is about 60 percent of the average students’ income of €870.
The variation between these numbers is explained by the different sectors they are comparing
(social versus private housing, exclusively student- or all housing for young people). Even though
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there are some discrepancies between these numbers, it becomes apparent that rents for student
housing in Amsterdam are rather high and have seen an increase in recent years.
Supply-related effects
In the coming paragraphs I will highlight some developments in the supply side of the market for
student housing.
Social student housing under pressure
The most affordable student housing in Amsterdam is provided by social housing corporations,
non-profit developers of social housing1. These institutions formally are privatized, but are still
under some governmental regulation. Shortly, their primary and lawful task is to take care of the
supply of affordable housing. To attain this goal corporations are subsidised in different ways, for
example by reduced land values2.
During the past ten years the Amsterdam city council has used the price of serviced building plots
to attain specific goals for student housing. Before 2003 the same fixed price was used for all types
of social housing. In 2003 however the Amsterdam city council reduced prices for student housing
by 50% to stimulate new construction. Two years later a special price for student dwellings with
shared facilities was introduced, at 33 percent of the price for regular social housing. Until 2012
these prices have been rising in total with 46%. Land prices for other types of social housing have
seen the same increase. These increases in land prices make it harder for housing corporations to
finance new social housing.
In 2013 two different methods were used to set student housing land prices. For housing
corporations this was still a percentage of the price for regular social housing. Other developers
however had the possibility to negotiate and get a project-specific price. Recently it turned out this
resulted in lower land prices for some commercial developers, leaving housing corporations
baffled. As a result, in 2014 corporations get project-specific prices as well, to guarantee they are
not disadvantaged compared to commercial developers. It seems like the city council has made a
mistake by using lower prices for commercial student housing, as it certainly does not foster
affordability.
The affordability of social student housing lately has been exposed to growing pressure in other
ways as well. Under the current conservative-social democratic government the size of the social
housing sector is reduced and housing corporations’ funding is diminished in different ways. One
example of this tendency is the introduction of the renters-tax (verhuurdersheffing), which is
charged over all income from renting the social housing stock. Housing corporations announce
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The non-profit housing sector is very important in the Netherlands. Between mid-nineteenth century and the
mid-twentieth century, the country underwent a process of religious, social, political and institutional
segregation called verzuiling. This, among other things, caused that many facilities and social tasks
(hospitals, nursing homes, basic education, media and universities, social housing, etc.) were run by
religious, social and political organizations. Within this sector, housing corporations or associations
[woningcorporaties] play a major role. These are non-profit property developers nonprofit primarily engaged
in the construction and management of social rented housing.
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Dutch municipalities continue to practice, although much less than until the 1980s, an active land policy.
Municipalities acquire land before it is appointed as urban land or get new functions in zoning plans. Building
plots are then developed and sold to commercial developers and social housing corporations. Amsterdam is
one of the few Dutch municipalities that still uses this active policy in most of the municipal territory. Plots for
social housing are often sold at lower prices than those for private housing.
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they will have to charge these costs to dwellers of social housing, who will as a consequence have
to pay higher rents. Moreover, another outcome is that in the near future new construction of social
housing - including student housing - will be minimised.
More private investments
Despite these expectations about new social student housing in the near future, the past four years
quite some student dwellings have been added. These additions can largely be attributed to
increased private investments in student housing. Investors are attracted by high, stable yields and
the shortage of dwellings.
However, the increase in investments comes at a cost. For a large part these investments are in
commercial student housing. These commercial concepts are looking for ways to evade the rent
regulation legislation (woningwaarderingstelsel or puntensysteem) 3. One of the most notable ways
to do so is the student hotel concept. These dwellings are registered as hotel rooms, which
excludes them from rent regulation as well as different other kinds of tenant protection. Rooms are
provided with lots of facilities and mainly target foreign students. The rents for these dwellings
however are rather high, starting at €795/month, which is more than 90 percent of an average
students’ income of €870.
Growth in ‘woningdelen’
One other effect of increasing rents is the growing number of students who share a dwelling
(known as woningdelen in Amsterdam). At first sight this does not sound like an uncommon
practice, however there are some legislative peculiarities connected to it. Officially a rental contract
should be offered to one household, which for example can be one student, a couple or a family. In
past years however rental contracts are increasingly offered to groups of students. This practice
has several consequences relating to both renters protection and rent regulation.
Because legally there can be only one student listed on the contract, the other dwellers have no
direct official rights when the student who’s name is on the contract moves out. In the worst case
this would mean they all have to look for another accommodation. In the best case the remaining
dwellers are offered a new contract, but this often comes with an increase in rents.
This leads us to another problem related to woningdelen, namely that legislation concerning rent
regulation often does not apply to these dwellings. The rent regulation system only applies to
housing up to a certain quality and surface. The maximum rent is €699,48. Houses suitable to live
in with several students have to be quite large, which in most cases means the maximum rent can
be fixed in the free market. Therefore, the rent regulation does not apply and the property owner
can charge any rent he wants.
Recently the city council has established new rules for sharing houses. These rules do cover the
problem of the dwellers who’s name is not on the contract but they do not cover rent regulation.
Moreover, an implementation scheme of these new rules is not known yet, so the exact effects of
the regulations are for now unclear.
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In the Netherlands, rents are regulated for housing that does not reach certain levels of quality and size. In
these dwellings the maximum legal rent is fixed according to a scoring system based on the characteristics
and quality of housing. Generally, a home below 60 m2 is always under this regulation, which limits the
maximum rent to €699, and housing above 70m2 is excluded from regulation. The rent for non-regulated
housing is set on the free market, where last few years prices for one to two bedroom dwellings in semicentral and central areas often exceed €1000 per month.
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Demand related effects
Increasing rents do not only have effect on the supply side, they influence demand as well. The
demand for student housing obviously comes from students. In the remainder of this short article I
will point out which consequences students bear, both now and in the future. To get a clear grasp
of these consequences I will focus on how an average students’ budget is constituted, namely
through governmental allowances, parental contributions, loans and income from part time jobs.
Reduced governmental support: growing debts
All Dutch students receive a grant from the government. For students living away from their parents
this grant is €260 per month, which is about 30% of an average students’ budget. However, from
2015 on this grant will be transformed in a loan. The exact results of this transformation are yet to
be seen, but some preliminary guesses can be made. If a student living in Amsterdam would lend
the same amount, a full four-year program would result in an extra debt of approximately €13.000.
There is no data available about the average student debt per city, but it seems likely that higher
housing costs are at least partly paid by additional loans. Although these are still guesses, it is
distinctly possible that students in expensive Dutch cities like Amsterdam will to the greatest extent
have to bear the consequences of cuts on student grants. Among these effects for graduates might
be reduced possibilities to receive a mortgage and increased monthly expenses to pay back
student debts.
It should be noted that a decrease in student budgets also might reduce demand for student
housing. This could take some pressure of the student housing market in Amsterdam but this
probably will not improve affordability in Amsterdam drastically, taking the massive shortage in
consideration.
Parental support
One other source students could fall back on to pay their rents are parental allowances. Six out of
ten students receive some kind of parental financial support, with an average of €230 per month
for students living away from their parents. Increasing rents could stimulate some parents to raise
their allowance, but obviously not all parents are able to do so or are not willing to provide any
amount of money. As a result, inequalities between children from affluent and less wealthy parents
may widen. Studying and living in Amsterdam could become more and more an option only for
those with sufficient familial capital to fall back on.
Additional income from jobs
Dutch students often have a part-time job to generate some extra income. Working a little more
could supply them with extra budget to pay increasing housing costs. Supposed there would be
enough jobs to do so, this would still be problematic since students are under increasing pressure
to finish their program in the conventional four years. When students use more time to finish their
program this has negative consequences for an university’s subsidies. This enlarged focus on
study efficiency makes it unfeasible to both work more and successfully graduate at the same time.
Temporary housing solutions
High rents and the shortage of student housing have brought about a rather large market for
temporary housing. These types of dwelling are let with a contract for a certain predefined period or
with reduced security of tenure. Often, vacant property - housing, as well as other types of
buildings - in this way become temporarily available to live in. Hochstenbach & Boterman (2014)
show how new types of non-linear housing pathways result from this kind of tenure. In some cases
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young people deliberately choose to live in temporary housing because it provides them with an
affordable dwelling at often otherwise unpayable locations. Others however get ‘trapped’ in
different kinds of temporary housing. They are forced from one unattractive dwelling to the next
one, without being able to satisfy their own preferences.
Conclusion
While Amsterdam is one of the most popular cities for Dutch students, affordability of student
housing has reduced drastically the past years. This has resulted in a growth of investments in
student housing, new commercial housing providers and increasing numbers of students sharing
dwellings. In the meantime, students are faced with reduced incomes due to cuts on student
grants. Combined with the high rents, this could lead to a bubble in student debts. Students might
as well be able to fall back on higher parental allowances, but this could lead to widening inequality
between those who can so and others who are not supported by their parents. For some students
temporary housing provides a solution, however some people might get stuck in these tenures,
without having security of tenure.
References and further reading
Boterman, W. R., Hochstenbach, C., Ronald, R., & Sleurink, M. (2013). Duurzame
Toegankelijkheid van de Amsterdamse Woningmarkt voor Starters [Sustainable Accesibility of the
Amsterdam Housing Market for Young People]. Amsterdam: University of Amsterdam.
Hochstenbach, C. & Boterman, W.R. (2014). Navigating the field of housing: housing pathways of
young people in Amsterdam. Journal of Housing and the Built Environment
Kamernet (2014). Student housing market figures 2013 [news item]. Retrieved from
http://blog.kamernet.nl/en/kamermarkt2013/
Kences (2014). Student ligt krom voor kamer [Students are on their uppers for rooms, news item].
Retrieved from http://kences.nl/nl/nieuws/nieuwsberichten/28-08-2014-student-ligt-krom-voorkamer.html
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