Study Tour Essay

6237 Words Jun 1st, 2015 25 Pages
What problems does the Netherland example illustrate in providing ongoing fiscal benefits and support to first home buyers?
Introduction
The housing market in the Netherlands has been shaped largely by government regulatory control both in the rental and owner occupier sectors. Nederlandse Vereniging van Banken
(2014) states that currently 56% of the population own the property within which they reside.
Whilst this is significant, this is still considered below average (62.3%) for the Euro-zone
(Nederlandse Vereniging van Banken, 2014).
Home ownership is a goal that has been aggressively promoted by the Dutch government, particularly since the mid 1980’s. Significant and prolonged fiscal benefits, mainly tax incentives, have
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Ultimately shortages, accompanied by long waiting lists for rental accommodation began to rise making homeownership an attractive option (Val de Wal & Lub, 2008). Keen to relieve the pressure on the rental market, the Dutch government began to promote homeownership primarily through a range of tax incentives to stimulate demand and encourage the population to purchase their first home.

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These incentives included full tax deductibility of mortgage interest payments (main residence only) meaning a purchaser could claim up to 52% (average 40%) of their interest back as at tax refund (Global Property Guide, 2014). In addition to this, property owners were not subject to tax on any capital gains from rising property prices. The government also provided home-ownership grants to low-income households, the total of which reached circa
€14.5 billion by 2006 (Van de Wal & Lub, 2008).
The government initiatives did have the desired result however with owner-occupancy rising to 42% by 1980, to 55% by 2005, and now currently, about 60% of the total housing stock is owner-occupied (Global Property Guide, 2014). The tax incentives, and no minimum deposit required by the banking sector, allowed people to purchase property that might not otherwise be able to afford to enter the housing market.
The consequence to this occurring in a relatively short period of

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