A group of 22 prominent economists has presented a step-by-step proposal for housing market reform. They deem the gradual elimination of mortgage interest tax rebates as the most important measure to be taken.

Economists Lans Bovenberg of the University of Tilburg and Dirk Schoenmaker of the Duisenberg School of Finance initiated the plan. They said they want to “offer an opening to politics”.

Thus far, coalition partners the Christian Democrats (CDA) and the conservative VVD have consistently opposed scrapping mortgage interest tax rebates. So has the Freedom Party (PVV), on which the minority cabinet relies for parliamentary support.

The economists point out “that the current system of home financing” has led to excessive mortgage debt among Dutch households. They say that 80 percent of the population believes that mortgage interest tax rebates are, at the very least, going to be reduced; as a result, the housing market is in a state of paralysis.

The economists argue for a gradual run-down of mortgage interest tax rebates in combination with other measures, including scrapping the real estate transfer tax and limiting maximum mortgage debt. They also favour a gradual increase in rents to levels conforming with prices on the open market.

The plan was rejected by tenants’ interest group Woonbond. They argue that housing policies should be based on the equal treatment of renters and buyers. “There is no reason for the government to stimulate or discourage either renting or buying.”

(gsh/kh)

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