2015 - Marietta Haffner - HousingaffordabilityintheNetherlandstheimpactofren (Retrieved 2015-07-28)

J Hous and the Built Environ (2015) 30:293312
DOI 10.1007/s10901-014-9409-2
ARTICLE
Housing affordability in the Netherlands: the impact

of rent and energy costs
Marietta Haffner Harry Boumeester
Received: 22 August 2013 / Accepted: 19 April 2014 / Published online: 18 June 2014
Springer Science+Business Media Dordrecht 2014
Abstract Energy costs have been rising as well as rents, both in the Netherlands and
elsewhere, leading to situations commonly described as housing poverty and fuel or
energy poverty. A dwelling may be unaffordable on at least two counts: rents or energy
costs that are too high in relation to income (excluding cases of too low income). This
paper measures comprehensively for the first time housing affordability of tenants in the
Netherlands with respect to rent and fuel in order to gain insight in the ways this ongoing
budgetary commitment can be calculated. Starting point is the expenditure-to-income ratio,
which is usually used in the Netherlands to represent the affordability of housing consumption. For 2012 its componentsincomes, rents and fuel costsare separated out. The
absence of a socially acceptable benchmark for affordable versus unaffordable housing
and the fact that lower-income households pay relatively more on rent and energy than
those with a higher income (Engels Law) call for an alternative method to measure
affordability. The residual income approach is shown to be useful in identifying households with housing and energy affordability problems, once social norms have been
established for the relationship between income, rent and energy expenses. It is concluded
that even energy expenses by themselves can push households over the affordability
threshold, in the situation where rents are considered as affordable.
Keywords Affordability Budgets Energy costs Expenditure-to-income
ratio Residual income Renting The Netherlands
M. Haffner (&) H. Boumeester

OTB Research for the Built Environment, Faculty of Architecture and the Built Environment,
Delft University of Technology, Jaffalaan 9, 2628 BX Delft, The Netherlands
e-mail: m.e.a.haffner@tudelft.nl; h.j.f.m.boumeester@tudelft.nl
URL: www.otb.tudelft.nl
M. Haffner
Centre for Urban Studies, School of Global, Urban and Social Studies, AHURI, RMIT University,
Melbourne, VIC, Australia
M. Haffner
CCHPR, Department of Land Economy, Cambridge University, Cambridge, UK
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M. Haffner, H. Boumeester
1 Introduction
Nowadays with rising energy costs, affordability of housing is not only dependent on
housing expenditures in a narrow sense (e.g. rent), but also on expenditures for energy. Is
housing threatening to become unaffordable because of unaffordable energy consumption
has become one of the key questions here. In the Netherlands, expenditure on energy rose
by 15 % over the past three years alone. This is in line with the trend in prices for gas and
electricity; in 2012, these were 120 % higher than 15 years ago (Rijkswaterstaat 2013). As
energy consumption does not necessarily vary with household income (low price elasticity)
but rather with household composition and dwelling quality, low-income households will
be hit harder than households with a higher income (Haffner et al. 2008). Corrected for
inflation, rents also rose by 5 % in the period 20092012 (Blijie et al. 2013). Household
incomes have been stagnating and even declining as a result of the (delayed) impact of the
Global Financial Crisis that has drawn the Netherlands into a triple-dip recession. Given
that economic situation, rising rents and energy costs increase the threat that increasing
numbers of households will be unable to pay for their housing. The question then rises: At
which point will these expenses squeeze other household consumption and leave households in poverty? This contribution seeks answers in light of research into the housing
affordability of tenants in the Netherlands in 2012, distinguishing the components of rent
and fuel in line with the Dutch debate that started recently on this topic (Weevers 2012).
The aim is to give insight in the ways this ongoing budgetary commitment to housing costs
can be calculated. Attention is focused on renters, as they are the households most likely to
find themselves in financial straits (Haffner and Boumeester 2010).
The national government in the Netherlands generally uses the expenditure-to-income
approach to represent housing expenses. This paper takes that approach as its point of
departure for the analyses of the components of affordabilityincomes, rents and extended
housing costs, including fuel. The results show that low-income households are paying
bigger ratios than higher-income households. Thus, chances are that housing consumption
will be less affordable to lower-income groups. Lacking a societal benchmark to determine
what is affordable versus unaffordable housing, an alternative method is needed. As
detailed below, the residual income approach (Stone 1998, 2006) is a useful way to identify
households at risk of housing and energy affordability problems.
This is the first time the exercise underlying this paper has been conducted for the whole
of the Netherlands. That is, this is the first analysis highlighting housing unaffordability
and ascribing it to expenditure on income, rent and/or fuel. These types of causes are linked
to the concepts referred to in the literature: income, housing and fuel poverty. Furthermore,
the analysis at the time of this study were performed with data hot off the press, with a
reference date of 1 January 2012. Before the results are presented, some background
information is introduced; first, the rental market and rental policy, followed by the different affordability concepts and the methodology.
For affordability, it is not the distinction private versus social landlord that is of major
importance, but the distinction between a tenancy in a dwelling with a regulated rent for
which rent regulation is relevant and a tenancy in a dwelling with a deregulated or liberalized rent for which rent regulation is irrelevant. Whether a rental dwelling belongs to a
category depends on the so-called threshold rent level. Dwellings with a rent lower than
653 Euro per month have a rent which is regulated, while dwellings with a rent of at least
653 Euro per month have a liberalized rent. The rent level is based on quality points that
are allocated to the dwelling mainly based on quality characteristics of the dwelling, like
the size of the living room or having a balcony. The number of points will determine the
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Housing affordability in the Netherlands
295
Table 1 Characteristics of the regulated rental sector and the liberalized or deregulated rental sector, 2012
Regulated rent
Liberalized or
deregulated rent
Total
Number of
dwellings
Number of
dwellings
Number of
dwellings
Single family
1,129,000
44
145,000
43
1,274,000
44
Multi family
1,441,000
56
190,000
57
1,631,000
56
Average gross rent

(monthly)
441
Dwelling type
846
488
Gross rent (monthly)

0362 Euro
553,000
22
553,000
19
363554 Euro
1,399,000
54
1,399,000
48
555652 Euro
618,000
24
618,000
21
653849 Euro
230,000
69
230,000
(Above 849 Euro)
105,000
31
105,000
335,000
12
2,905,000
100
Number and share of all

tenants
2,570,000
88
Source CBS, WoON 2012; calculations by authors
maximum rent that the landlord is allowed to set, but does not always do that at the start of
rental contract that will run indefinitely. The annual rent increase is applied for the sitting
tenant each 1 July based on a decision by Parliament (Haffner and Boumeester 2010). As
Table 1 shows, rent regulation is applicable to the majority of the dwellings in the rental
sector (88 %).
While the difference in type of dwellingsingle-family versus multi-familybetween
the regulated and the liberalized rental segment is almost non-existent, the difference in
rent level based on quality differences is almost double, as Table 1 shows. On average the
rent of a rental dwelling with a deregulated rent is 92 % higher than the rent of a rental
dwelling with a regulated rent (846 vs. 441). This difference is based on a quality
difference (at least 140 quality points for the liberalized rental sector).
Table 2 shows the composition of the rent-to-income ratios for the rental sector.
Deducting housing allowances of on average 67 Euro from monthly gross rent of 488 Euro
and expressed as share of disposable household income yields an average net rent ratio of
25.5 % for 2012. After adding other expenditures such as the cost of energy and insurance
to net rent, the resulting total ratio comes to 36.4 % of disposable household income.
Housing allowances as core rental subsidy in the Netherlands explicitly reduce gross
rents (Priemus and Elsinga 2007). About one-third of all tenants receive a housing
allowance (2010; Van den Brakel et al. 2012). The amount of the benefit depends on the
rent level, but also on households income, age and composition. All tenants who are
considered as being in need according to the criteria for each of these attributes and who
are living in rental dwellings with a monthly rent up to the liberalization threshold at the
start of the subsidy payment period are eligible for a housing allowance.
In comparing the two rental segments on the rent ratios, it becomes clear from Table 2
that on average the difference in rent paid between both segments is bigger (92 %) than the
difference in income (47 %) yielding a higher average net rent ratio in the liberalized rental
segment (36.8 %) than in the regulated rental segment (25.0 %). With a difference between
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Table 2 Average housing expenditure for all tenants, in Euro per month and as share of disposable
household income, according to regulated and deregulated rental segment, 2012
Tenants
Gross rent per montha
Rental dwelling with

a regulated rent
Rental dwelling
with a liberalized
rent
Total rental
sector
Euro
Euro
Euro
441
846
71
33
67
370
813
421
-/-Housing allowances
Net rent
Net rent ratio = net rent/disposable

household income
25.0
488
36.8
25.5
?Necessary incidental expenditureb
174
189
176
Total housing expenditure
544
1002
597
Total ratio = total housing expenditure/

disposable household income
Annual disposable household incomec
Number and share of all households
35.3
44.8
21,844
2,569,900
32,007
36.0
335,100
36.4
23,017
4.7
2,905,000
40.7
Gross rent and gross housing expenditure includes financing costs, property tax and other property-owner
expenditure, such as home insurance fees and ground lease charges. In owner-occupation it excludes
owners maintenance
Necessary incidental expenditure includes expenditure on energy
Net disposable household income, including income from business activities, social benefits and social
insurance, child benefit, contractual savings, holiday allowance, sickness funds premiums (employer and
employee) or sickness insurance premiums, bonuses. The net disposable household income, which is corrected for rent allowances and income tax effect, for each month is the annual income registered with the tax
administration divided by twelve
rental segments in other expenditure of about 9 %, the difference in total ratio amounts to
84 % between the liberalized rental segment (44.8 %) and the regulated rental segment
(35.3 %).
2 From rent- to-income ratio to residual income

An average amount or ratio per rental segment, as shown in Table 2, may turn out to be
elusive and irrelevant when information is required about the ratio for individual households. Therefore, for the remainder of this contribution the overall average has been broken
down for the first five income deciles of tenants. Those averages have been split out
according to tenancy in a dwelling with a regulated rent or in a dwelling with a deregulated
rent. The first five deciles contain the 50 % of the tenant population with the lowest
household income (whereby negative incomes are excluded), ranked from lowest to
highest. Each group consists of ten percent of the households. The income levels associated
with the upper limits of the deciles are shown in Table 9 in the appendix.
Table 3 shows the rent as a share of income, and Table 4 shows the energy (gas and
electricity) expenses as a share of income. When the number of households included in
Table 2 is compared with the number in Tables 3, 4, it is clear that tenants are overrepresented in the first five income deciles. Furthermore, Tables 3, 4 show the same trend:
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Table 3 Average net rent ratio of tenants in the first five income deciles, according to type of rent, 2012
Renting a dwelling with
regulated rent

a liberalized rent
Net rent
ratio
Net rent
ratio
Number of
households
Number of
households
Income deciles
1st decile
34.7
513,000
71.0
2nd decile
25.5
491,000
53.4
22,000
21,000
3rd decile
23.3
402,000
44.5
20,000
4th decile
21.1
305,000
39.0
25,000
5th decile
19.5
221,000
34.1
31,000
Single, younger than 65
29.7
804,000
55.0
31,000
Single, 65 or older
26.8
442,000
48.1
36,000
Single-parent family, younger

than 65
21.7
220,000
38.8
12,000
Couple, younger than 65
23.1
142,000
47.7
14,000
Couple with child(ren), younger

than 65
20.6
120,000
44.8
12,000
Couple, 65 and older
20.6
204,000
35.1
13,000
Total
26.1
1,932,000
47.2
118,000
Types of household
Income deciles are determined on the basis of the income of all households
poorer households spend relatively more of their income on rent and energy. This conforms
to Engels Law, which would apply to what economists call necessity goods (Haffner and
Boumeester 2010; Hulchanski 1995). However, the spread in the rent ratio (from 19 to
70 %) is much larger than that in the energy ratio (from 5 to 9 %), indicating that energy
expenses vary much less with income than rent does.
As Table 3 shows, the rent ratio differs between the rental segments by a factor of
almost two. Accordingly, the conclusion must be that regulation of rents will be more
effective (by producing lower ratios) than deregulation. Furthermore, tenants living in a
dwelling with a regulated rent will be able to get a housing allowance, when eligible. As
the regulated rental segment is the biggest rental segment, this is one that is examined in
the remainder of this contribution. Another reason for this choice can be found in the
composition of the population: in the liberalized segment, often the temporary situations
(just divorced) are housed causing affordability ratios to be high.
Now we can turn to the question of what may be considered as affordable. For
households in the first income decile, is a rent ratio of 35 % and an energy ratio of nine
percent affordable? Is 27 and 7 % affordable for the elderly? As a ratio does not shed much
light on the topic, we turn to an alternative financial measure, residual income, which is
defined as income left after housing expenses are deducted. The usability of that indicator
is aptly summed up in the following statement: Housing costs constitute the most
important and most direct impact of housing on poverty and material deprivation (Tunstall et al. 2013: 5). The reason to focus on rent and energy rather than other expenses lies
in their budgetary priority; rent in particular is generally a large budget item and one that
cannot be reduced in the short term.
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Table 4 Average energy ratio of tenants in the first five income deciles, according to type of rent, 2012
regulated rent

a liberalized rent
Energy
ratio
Energy
ratio
Number of
households
Number of
households
Income deciles
1st decile
8.7
513,000
8.6
2nd decile
7.9
491,000
7.9
22,000
21,000
3rd decile
6.7
402,000
6.8
20,000
4th decile
5.9
305,000
5.9
25,000
5th decile
5.3
221,000
5.0
31,000
7.4
804,000
6.6
31,000
Single, 65 or older
7.5
442,000
6.7
36,000

than 65
8.0
220,000
7.7
12,000
6.2
142,000
6.1
14,000

than 65
7.4
120,000
7.3
12,000
6.2
204,000
5.9
13,000
Total
7.3
1,932,000
6.7
118,000
Types of household
The concept of residual income is widely applied in settings where a household is

expected to have enough discretionary income to participate adequately in social life. The
residual income allows for a sufficient level of consumption of goods and services after
taxes and after expenditures on necessity goods (e.g., good housing; Hancock 1993;
Heylen and Haffner 2012; Ritakallio 2003; Stone 1998, 2006; Thalmann 1999).
The main advantage of the concept of residual income over rent ratio is that it expresses
the absolute level of possible consumption. This level can be empirically determined for all
types of households and compared to normative amounts. In addition, a norm can be
determined per household type for a package of consumption items, including the cost of
housing. Although such norms will be partially subjective, they can be established and
validated for a given type of society.
3 Poverty due to housing and energy expenses

Norms related to residual income reveal whether housing consumption is unaffordable due
to the cost of a basic package of other consumption goods. If households are not deemed
able to finance their socially acceptable consumption needs from their income, their
housing consumption is considered as unaffordable by certain norms. These norms could
be based on a socially (interpreted as determined by society) determined minimum package
of consumption (basic needs) or a socially determined modest but adequate threshold
that would allow a normal level of participation in society at large (movies, newspaper,
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299
film, vacation, etc.; Bradshaw 1993; Heylen and Haffner 2013; Soede and Vrooman 2008;
Tunstall et al. 2013).
A standard of housing affordability defined in terms of other consumption expenditures
skims over issues like social exclusion and povertynot being able to participate in an
acceptable manner (enough consumption) in society because of the lack of resources
(Fusco et al. 2010: 9). Residual income has also been called after-housing-cost income. It
implies a situation of poverty induced by housing expenses that are too high in relation to
the socially determined norm or benchmark of consumption.
The social norm can be determined in an absolute or a relative way (Bradshaw and
Mayhew 2010a; Stone 2006; Hancock 1993; Freeman et al. 2000). A relative norm will
pertain to the income level in a country, such as the Eurostat at-risk-of-poverty line
(Bradshaw and Mayhew 2010a, b). In the US such a standard has been called housinginduced poverty or housing poverty (see overview in McConnell 2012).
An alternative approach is the use of an absolute benchmark, the approach taken here.
The latter is based on an absolute amount, a normative budget that a household with a
certain composition will need at a particular location and a given point in time in order to
participate in society based on its prevailing norms. This is what Stone (2006) called
shelter poverty. We will use the terms shelter poverty and housing poverty interchangeably, regardless of the type of norm, when the poverty comes from rents being too high in
relation to other budgeted consumption.
When the poverty situation is due to fuel or energy costs being too high in relation to
the income norm (budget), the literature uses the term fuel poverty. A more precise term
would be fuel-cost-induced poverty, as it is the fuel costs that induce the situation. The
term apparently came into use in the late 1970s in the UK and then disappeared for about
decade. At first, the fuel-poverty line was relative, based on the twice-median concept:
those spending more than twice the median on fuel, light and power (cited in Liddel
et al. 2012: 27). Boardman (1991); see also Liddel et al. 2012 and Moore 2012) is credited
with reviving the concept of fuel poverty, defining it as the situation where expenditure on
energy exceeded ten percent of income. Formally, the way it was calculated, it approximated the twice-median concept as it was used before. The 2001 UK Fuel Poverty Strategy
returned to this definition. The most recent Annual Report on Fuel Poverty Statistics 2011
(DECC 2011; according to Liddel et al. 2012) distinguishes three ranges of fuel poverty,
following the classification put forward for Scotland. Fuel poverty is a share between 10
and 15 % of income on expenditure for heat, power and light (i.e., between twice and three
times median); severe fuel poverty is up to 20 % and extreme fuel poverty is more than
20 % (i.e., greater than four times the median; SHCS 2002 according to Liddel et al. 2012).
As in the Netherlands housing and energy expenditure usually are presented together, it
will follow that similar to the relatively novel exercise by Moore (2012) for England, the focus
in this contribution is on an extended concept of housing expenses that covers rent and fuel
together. This approach will allow conclusions about whether the consumption of rental
housing including the energy consumption can be considered as affordable. The basic data are
the budgeted amounts for a socially acceptable package of goods and services including rent
and energy. The aim is to unravel the causes of unaffordability of rental housing consumption.
4 Methodology
Our calculations to establish a norm for the net rent ratio are based on data provided by the
Nibud, the Dutch budget research institute (Nibud 2011; compare Bradshaw and Mayhew
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2010a, b). The Nibud distinguishes between basic and comparative expenditures. Basic
expenditures are the minimum amounts required for a certain budget item. While reflecting
household composition, the level of basic expenditure is independent of the level of
household income, as these expenditures are for basic necessities. Comparative expenditures are the average amounts that similar households with a similar income spend on
particular budget items. Being derived from the Budget Survey carried out by the national
bureau of statistics, Statistics Netherlands (CBS), the latter amounts reflect both household
composition and income.
The Nibud annually updates its recommended net rent ratios for different compositions
of tenant households. The advised levels are established on the principle that the households having the lowest incomes and paying the maximum amounts for housing (here, the
net rent) should still have the means to cover other basic expenditures.
For higher-income groups, the level of these other expenses should lie somewhere
between the basic and the comparative expenditures so they could put some income into
savings. For these higher-income groups, the norm for their maximum rent then equals the
difference between income and expenditures on all other items (including savings). This is
the norm for the level of net rent, given the socially acceptable (instead of minimum)
pattern of expenditure for other goods and services. This calculation is based on the
normative advice of the Nibud, with the exception of the treatment of the item savings, as
can be observed from Table 10 in the appendix. We have applied this latter procedure
when calculating all income levels above the welfare eligibility norm, which reflects the
consensus that households with an average income should be able to participate fully in
society. This implies that one should be able to bear the costs.
For households with an income up to the welfare eligibility normthe lowest income
groupsthe net rent norm took into account all expenditure at the basic level, with the
exception of net rent, as the level in between basic and comparative expenditure was not
achievable at that income. The remaining incomethe difference between income and
basic expenditurewas then used to calculate the scope for rent (see Table 10). Confronting that amount with the household income, the norm for the net rent ratio is derived.
Note that for households with an income below the ceiling for social welfare, allowing for
basic levels of expenditure results in very low rent ratio norms.
Our calculations to establish a norm for the energy costs ratio are also based on data
provided by the (Nibud 2011). The Nibud distinguishes between basic and comparative
expenditures for energy costs. For the income levels up to the welfare eligibility normthe
lowest income groupswe used the basic expenditures for energy costs to calculate the
norm for the energy costs ratio. For higher-income groups the average amount of the basic
and comparative expenditures for energy costs was used in calculating this norm ratio.
These procedures have been applied to calculations for all income levels that correspond
to the lower limits of the income deciles for all households. All renters in any given decile
were subsequently allocated the same rent ratio norm and energy costs ratio norm that
had been calculated for the households situated at its lowest level. The norm ratio calculated
on the basis of the lowest budget in the Nibud classification was used for the households in
the first (lowest) decile (or lower if their income was below the maximum level to qualify
for welfare benefits, as explained above). The calculated norms can subsequently be
compared with the observed rent ratios and the energy costs ratio of the tenants. Table 11 in
the appendix shows the norms for the net rent ratio and the energy costs ratio based on a
socially acceptable budget, according to income decile and type of households.
This comparison has been carried out with data from the WoON 2012, which was hot
off the press when conducting the analyses. The WoON 2012 is the Dutch cross-sectional
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Housing Survey for which almost 70,000 households were interviewed. Weighting factors
were applied to the sample to make the results valid for all Dutch households, of which
there are more than seven million (Blijie et al. 2013). In the database the income data were
derived from the Dutch tax administration and were coupled to the survey data.
5 Income poverty
One important aspect of the methodology described above is that household income is
assumed to be sufficient to cover the basic housing expenditures. When it drops below the
minimum income, the households net rent ratio may be expected to come out considerably
higher. That is indeed what happens when the net rent ratios of households whose income
lies below the socially acceptable minimum are compared with the ratios of households
whose income lies above that threshold (Table 5).
The net rent ratio of a household in the lowest income group lies 1319 percent higher
than that of a household whose income is above the social minimum. It is self-evident that
the low-income households will easily exceed the norm for the net rent ratio. Nonetheless,
to conclude that these households would then fall into housing poverty would be missing
the point. Their problem is actually income poverty, and if this situation persists for a
longer period, they will not be able to afford all budgeted items of their basic expenditures.
To examine the problem of housing poverty more closely, we will therefore leave the
group of households whose income is below the social minimum out of the analysis.
6 Housing poverty
The socially acceptable norm for the net rent ratio per household are confronted with the
actual net rent ratio from the WoON 2012 database, and the results are shown in Table 6.
The comparison shows that overall 45 % of the tenants in the regulated rental segment can
be considered as paying an unaffordable rent according to the socially acceptable standard.
If this situation were to continue for a longer period, the risk of poverty induced by housing
would be serious for these approximately 745,000 households.
The tenants with an unaffordable rent level are concentrated in the first and second
income decile. Their annual household income lies between the social minimum level and
17,700 (Table 9 in the appendix). Between 70 and 90 % of these households have a net
rent ratio that is above the norm. They would have to economize on other budgeted items
in order to be able to pay their net rent expenditure.
When taking household type into account, the risk of housing poverty appears to be
more spread out (Table 6). The share of older singles (52 %) and single-parent families
(72 %) that have to pay an unaffordable rent is above the average. These households have
often experienced an income downturn and either did not or could not adjust their housing
situation. It is much less common for younger and older couples to have a net rent that
actually lies above the norm. The share of households with a rent that is unaffordable,
according to the norm, is much smaller (2530 %). The income of the latter households is
generally somewhat higher, which then slightly raises the norm for the net rent ratio.
The risk of housing poverty in 2012 turns out to be the same as in 2009 (Haffner and
Boumeester 2014); only in the first income decile did the share of households with an
unaffordable rent increase, and then only a bit.
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Table 5 Average net rent ratio of tenants in the first five income deciles in dwellings with a regulated rent,
according to minimum income level, 2012
Below minimum income
Minimum income and above
Net rent
ratio
Number of
households
Net rent
ratio
47.6
136,000
26.1
Single, 65 or older
41.9
31,000
25.6
411,000

than 65
31.5
51,000
18.8
170,000
Number of
households
Types of household
668,000
35.3
23,000
20.7
119,000

than 65
30.3
26,000
18.0
94,000
26.2
13,000
20.2
190,000
Total
40.4
280,000
23.7
1,652,000
Table 6 Share of tenants in the first five income deciles with a minimum income and above in dwellings
with a regulated rent paying an affordable or unaffordable net rent based on the budget norm, according to
income decile, and household type, 2012
Unaffordable
Affordable
Total number
of households
Income deciles
1st decile
89
11
306,000
2nd decile
70
30
429,000
3rd decile
30
70
391,000
4th decile
17
83
305,000
5th decile
99
221,000
43
57
668,000
Single, 65 or older
52
48
411,000
Single-parent family, younger than 65
72
28
170,000
29
71
119,000
Couple with child(ren), younger than 65
47
53
94,000
23
77
190,000
Total
45
55
1,652,000
Types of household
Sources CBS, WoON 2012, and Nibud 2011; calculations by authors
7 Energy poverty
The cost of renting thus lies above the norm for a large share of tenants in the regulated
rental segment. This conclusion also turns out to be valid for energy costs. A tenant in the
regulated rental segment spends on average ten percent of the household income on energy
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Fig. 1 Share of tenants in the first five income deciles* with a minimum income and above in dwellings
with a regulated rent having an affordable or unaffordable energy expenditure based on the budget norm,
according to income decile, and household type, 2012. * Income deciles are determined on the basis of the
income of all households. Sources CBS, WoON 2012, and Nibud 2011; calculations by authors
(i.e., 90 % of necessary incidental expenditure; Table 2), which is more than a quarter of
the average housing expenditure. The energy ratio has a large spread, as four out of ten
tenants have an energy ratio above ten percent (appendix Table 12). According to the
classification presented above, they are living in fuel-cost-induced poverty (or just fuel
poverty). Severe fuel poverty is found among eight percent of the tenants, while extreme
fuel poverty (defined as an energy ratio above 20 %) occurs among two percentaround
33,000 households.
In the situation sketched above, energy costs are only coupled to a tenants income;
household composition is left out of the picture. Yet it is known that the size of a household
strongly affects its energy costs. On the one hand, households with multiple members have
advantages of scale (for instance, heating the dwelling for more than one person). On the
other hand, households with multiple members consume more energy (occupying larger
dwellings and using more electrical appliances). The norm for the energy costs ratio based
on a socially acceptable budget incorporates income and household type. For all tenants in
dwellings with a regulated rent, the norm amounts to 7.2 % of the income on average
(Table 11) with a spread from 5.2 % for tenants in the fifth income decile to 8.7 % for
tenants in the first. The norm is thus lower than the one given in the international literature
for fuel poverty (see references in Sect. Poverty due to housing and energy expenses).
The socially acceptable norm for the energy costs ratio per household was confronted
with the actual energy costs ratio from the WoON 2012 database, and the results are shown
in Fig. 1. It shows that, overall, 84 % of the tenants in the first five income deciles and
living in a dwelling with regulated rent have unaffordable energy costs, according to the
socially acceptable standard. The share of households with unaffordable energy costs is at
least 75 % in all income deciles and for all types of households, while it reaches up to
90 % for households in the first decile. Unaffordable energy costs are relatively less
common among households with children (single-parent families and couples with children) than among singles and two-person households. This difference could reflect the
123
304
with a regulated rent, having an affordable or unaffordable housing (net rent and energy) expenditure based
on the budget norm, according to income decile, and household type, 2012
Housing (net rent and energy) expenditure
Unaffordable
Total number
of households
Affordable
Income deciles
1st decile
95
306,000
2nd decile
79
21
429,000
3rd decile
37
63
391,000
4th decile
22
78
305,000
5th decile
99
221,000
Types of household
48
52
668,000
Single, 65 or older
61
39
411,000
74
26
170,000
34
66
119,000
51
49
94,000
33
67
190,000
Total
51
49
1,652,000
advantage of scale enjoyed by larger households. In absolute terms, of course, the total
expenditure on energy is considerably less than that on rent. Nonetheless, these results
confirm the increasing problem of high energy expenditures.
8 Housing and energy poverty combined

The results of a comparison between the actual housing (rent and energy) expenditure ratio
and the norm for housing (rent and energy) expenditure are presented in Table 7. Over half
of all tenants whose income fall into the first five deciles and who live in the regulated
rental segment of the rental market have housing expenses that actually must be considered
as unaffordable. If that situation persists for long, these 844,000 households (51 % of 1.6
million tenants with a median or lower income in the regulated rental segment) will be
expected to have an increased risk of housing- and energy-cost-induced poverty. They
will have to economize on other budget items, though doing so in line with the socially
acceptable standard.
Those at greatest risk are the tenants in the first two income deciles, where the share of
households with unaffordable rent and energy costs reaches 80 and 95 %. Further, the risk
turns out to be higher than average for single-parent families (74 %) and singles older than
65 years of age (61 %). For these tenants, the heightened risk of falling into housing and
energy poverty is the consequence of their income level, which is generally below
average.
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305
The outcomes for rent and energy affordability problems are crossed in Fig. 2. As
indicated before in 2012, or 844,000 households, the total rent and energy costs prove to
be unaffordable. 114,000 of these households have an affordable net rent ratio but pay
energy costs in excess of the defined norm. Households with an unaffordable net rent ratio
(745,000) will also be confronted with unaffordable total housing expenditures most of the
time. Only 15,000 of these tenants (1 %) have energy expenses lower than the norm.
These compensate the unaffordable net rent. Of all tenants in the first five income deciles
and living in the regulated rental segment, 48 %, or 793,000 tenants, have both rent and
total housing expenditures that are affordable according to current socially acceptable
norms.
Finally, Fig. 2 compares the affordability outcomes between 2009 and 2012. Although
3 years cannot be called a trend, the number of tenants who are considered as paying
unaffordable housing costs is with 730,000 in 2012 larger than with 689,000 in 2009,
while the number of total tenants involved is smaller (about 1,708,000 vs. 1,652,000).
What can be called a trend, however, is that on average tenants are spending a larger share
of their income on rent corrected for housing allowance; 23 % in 2009 versus 18 % in
1986. Compared to owner-occupiers their disposable household income on average
increased less than the income for owner-occupiers (Blijie 2010). This trend implies a
marginalization of the rental sector by income (Haffner and Boumeester 2010). Thus it
cannot be surprising that tenants are more likely to be confronted with affordability
problems than owner-occupiers. What, however, can be considered as a surprise is that
these types of calculations have not seen the daylight in the Netherlands until quite
recently (e.g. Kromhout 2013). It has not been a tradition to determine housing affordability (Blijie 2010).
9 Possible causes of affordability problems

The first theme that must be closely related to housing affordability is the theme of the
quality of housing consumption. If households consume too much housing and/or energy,
Fig. 2 Tenants in the first five income deciles* with a minimum income and above in dwellings with a
regulated rent, having an affordable or unaffordable housing (net rent and energy) expenditure ratio,
according to an affordable or unaffordable net rent ratio, 2009 and 2012. * Income deciles are determined on
the basis of the income of all households. Sources CBS, WoON 2009 and 2012, and Nibud, 2008 and 2011;
calculations by authors
123
306
with a regulated rent consuming more than the median usage of living space, electricity or gas, according to
affordable or unaffordable net rent or energy expenditure, and household type, 2012
Types of
household
Above median square

meters living space
Above median electricity

consumption
Above median gas

consumption
Unaffordable
net rent
Affordable
net rent
Unaffordable
energy
expenditures
Affordable
energy
expenditures
Unaffordable
energy
expenditures
Affordable
energy
expenditures
Single,
younger
than 65
54
48
61
11
61
Single, 65 or
older
53
48
55
16
57
Singleparent
family,
younger
than 65
56
56
60
14
63
Couple,
younger
than 65
51
50
60
59
Couple with
child(ren),
younger
than 65
54
49
63
12
66
Couple, 65
and older
49
53
57
60
Total
53
49
59
12
60
they are said to overconsume which may be the reason for the unaffordability problem. The
other side of the coin will be, if households under consume housing, e.g. overcrowd a
dwelling or do not heat the dwelling to normal temperatures, they may be unjustly
classified as living in affordable housing (Freeman et al. 2000; Hancock 1993; Heylen and
Haffner 2012, 2013; Maclennan and Williams 1990; Stone 2006; Thalmann 2003).
Of course, any norms that will be formulated on over- and under consumption will not be
anything else than vice-ridden, as the determination of enough quality in housing and
energy consumption is a complex exercise. In order to at least provide an indication, Table 8
presents the share of households that consume more rooms than the median number of rooms
per household type for tenants with an unaffordable net rent and for tenants with an affordable
net rent. Overall this share is slightly higher for tenants with an unaffordable net rent (53 %)
than for tenants with an affordable net rent (49 %). This is an indication that unaffordable net
rent of households will be caused only partly by overconsumption in terms of square meter
living space. This is especially the case for singles and couples with children.
Table 8 also present the share of households that consume more electricity or gas than
the median usage per household type for tenants with unaffordable energy expenditures
and for tenants with affordable energy expenditures. Here the relation between unaffordable energy expenditures and overconsumption is much stronger. Up to 60 % of the tenants
with unaffordable energy expenditures consume more electricity or gas than the median
123
307
usage per household type. This share is much smaller (and almost zero for gas consumption) for the tenants with affordable energy expenditures. Thus the results differ by
expenditure item. For space consumption the differences between the household types are
small and ambiguous, for energy consumption they are larger. As indicated before, these
results cannot be anything more than an indication as they give no insight into the reason of
this apparent overconsumption: the dwellings size or sustainability or households
behavior.
Next to the quality of the consumption of housing and energy, there may be other
factors that contribute to the relatively sudden and sizeable risk of affordability problems in
the Netherlands. As indicated above, it may be considered as an income problem, but this
is not analysed any further here. Another reason that cannot be investigated further is a
reduced importance of housing allowances as subsidy instrument as a result of government
savings (Ministerie van BZK 2011).
Then there may be a question of the norms. As indicated before, the Nibud proposes
advised levels of consumption, not norms of consumption, indicating some subjectivity
when the average per consumption item is chosen between the basic budget and the
comparative budget as the advised level of consumption. If the minimum norms for
consumption are taken as starting point, instead of what we have called socially acceptable
norms which were used for income groups above the first decile, the residual approach
allows for higher expenditure on rent than in the case when other consumption expenditure
is set at the level which is considered as socially acceptable. For example, the norm for rent
for the fourth income decile will be 44 % of income instead of 30 %. For lower income
groups, nothing more than the basic budget (with the higher norms for housing expenditures) are possible. There the question would be whether these budgets have been set
realistically, as they adapted to minimum income available (Nibud 2011).
Last but not least, it should be observed that even though for a large group of tenants
whose net rent and energy costs ratio exceed the established norm, this situation may not
necessarily be perceived as a problem. Households may attach less value to certain consumer goods and consequently spend less (i.e., less than stipulated in the norm) on those
budget items. They could then spend more on housing (an instance of the subjectivity of
norms). This difference between households also applies to the perception of poverty. The
norms for net rent and energy ratios applied in the analysis are based on a socially
acceptable definition of what it means to live well and in good housing, but that definition
does not necessarily coincide with an individuals sense of quality of life. It could well be
that the longer a situation of unaffordable net rent and energy costs persists, the greater the
likelihood of housing and energy poverty becomes, and with it the more real the threat of
social exclusion. How the situation is perceived, can only be revealed by the tenant.
10 Conclusion
The aim of this paper is to measure housing affordability of tenants in the Netherlands,
distinguishing the components of rent and fuel, and to give some insight in the ways this
ongoing commitment to housing costs can be calculated. The analysis starts with the
expenditure-to-income approach, which is usually used in the Netherlands to represent the
affordability of housing consumption. Its componentsincomes, rents and fuel costsare
separated in an alternative way in order to analyze the housing costs based on normative
net rent ratios and energy ratios for different household types (the so-called budgets). By
using the newest data at the time of the analyses (1 January 2012), we determined the share
123
308
of tenants in the first five income deciles who have a minimum income or above (selecting
out those that are considered as having an income problem) and who are living in a
dwelling with a regulated rent and who were confronted with unaffordable net rent and/or
energy costs.
Even though housing allowances are mainly targeted to this group of households, the
net rent ratio as well as the total housing costs (including expenditure for electricity and
gas) lie below the current level of socially acceptable norms for only 49 % of the tenants.
This outcome implies that less than half of the tenants in the first five income deciles in the
regulated segment of the rental market seem to pay an affordable rent according to the
budget-based norm that was used here. For the lowest income group the norm is equal to
the minimum package of consumption, while for the other income groups it is set equal to
what we call a socially or societal acceptable norm or budget.
The net rent cost as well as the energy costs are unaffordable for five out of ten
households in the selected group of tenants. More than half of the tenants covered in the
analysis, or 844,000 households, have housing costs in excess of the recommended level.
Among them, the share of tenants with unaffordable energy costs is even larger than the
share with unaffordable net rent costs. The effect of a rent that is too high is generally
greater when expressed in absolute Euro amounts. The incidence of housing and energy
poverty is strongly concentrated in the first two income deciles and among older singles
and single-parent families.
An explanation of the fact that housing is deemed unaffordable for such an unexpected
large share of these tenants may be that the socially acceptable budgets that we have
defined must be considered as too tight for the necessary expenditures at the basic level for
the various items. Households would then easily exceed the norm for rent and energy costs.
Of course, it could also be that part of the affordability problem is caused by the fact that
households live in more spacious dwellings than necessaryleaving aside whether
housing market conditions force them to do so. However, the share of households with an
above median consumption of square meter living space is only slightly bigger for tenants
with unaffordable net rent. The relation between overconsumption of electricity and gas
and unaffordable energy costs appears to be stronger. Within the scope of this project we
could not investigate, however, whether this difference is caused by the size or sustainability of the dwelling or by the behavior of the household.
When the threat of affordability problems is perceived as reality by households, which
will be the case the longer the situation lasts, the threat of social exclusion will become
reality as well. The question of how to cope with the situation will become urgent in due
course. Households themselves possibly will be able to move house in the longer term, even
though suitable dwellings with a lower rent may not be readily available. Decreasing energy
consumption may be even more difficult to cope with, if cheaper dwellings have a worse
energy quality. In the Netherlands, it is up to the landlord to make energy-saving adaptations
to the dwelling. These, however, usually raise rent, even though a pay-back time may be
involved which allows a trade-off between rent and expenditure for energy. In the end, it
will be a political decision whether housing expenditures are considered as affordable and
whether households are to cope themselves. It must be concluded that the Netherlands has
had a tradition of not calculating housing affordability, but only housing expenditures.
Acknowledgments We would like to thank Gust Marien for making the calculations and two referees and
the Editors for their helpful comments on this paper. An earlier version of this contribution was presented at
the RC43 conference of the International Sociological Association that took place in Amsterdam from 1012
July, 2013.
123
309
Appendix
See Tables 9, 10, 11, 12.
Table 9 Percentiles of annual
disposable income, based on
income for all Dutch households,
2012
Sources CBS, WoON 2012;
calculations by authors
Percentile 10
13,267
Percentile 20
17,706
Percentile 30
21,628
Percentile 40
25,745
Percentile 50
30,600
Table 10 Average monthly expenditures per item for single person households in a rental dwelling,
according to the basic, in the comparative and the societal acceptable budget
Basic
budget
Comparative
budget
Societal acceptable
budget
990
2,500
2,500
Net renta
212
507
1,113b
Gas
58
64
61
Electricity
29
32
31
Water
Levies
46
23
Telephone, tv, internet
53
64
59
Insurance
149
149
149
Education
Membership fee, subscription
109
55
Private transport
278
139
Other recurring expenses in total
297
751
524
Clothing and shoes
48
123
86
Interior, maintenance house and garden
89
256
173
Additional healthcare
23
23
23
Leasure/entertainment/vacation
318
159
Incidental expenses in total
160
720
440
Nourishment
190
205
198
Other housekeeping expenditures
60*
154
107
Housekeeping expenses in total
250
359
305
Social participation (total of all items with*)
71
36
Savings
163
82
All expenditures (excluding rent) in total
778
1,993
1,387
Income 2/2 all expenditures (including rent)
Disposable income
Expenditures
Net rent is gross rent minus housing allowanc
For the societal acceptable budget the net rent is the income minus all other expenditures
Source Nibud 2011
123
310
Table 11 Norms for net rent

ratio and energy cost ratio based
on socially acceptable budget,
according to income decile and
type of household, 2012
Norm for
net rent ratio
Norm for
energy costs
1st decile
20.8
8.7
2nd decile
20.8
7.9
3rd decile
29.6
6.7
4th decile
32.3
5.9
5th decile
35.8
5.2
29.9
7.4
Single, 65 or older
27.6
7.4
Single-parent family,
younger than 65
16.8
7.9
Income deciles are determined

based on the income of all
households
24.9
6.2
Couple with child(ren),

younger than 65
18.2
7.4
Sources CBS, WoON 2012 and

Nibud 2011; calculations by
authors
25.5
6.2
Total
26.3
7.2
Income deciles
Types of household
with a regulated rent, according to energy ratio, income decile, and household type, 2012
Energy ratio
010 %
1015 %
1520 %
20 % and above
Total
1st decile
18
46
28
2nd decile
44
45
10
425,000
3rd decile
67
30
389,000
4th decile
85
14
302,000
5th decile
95
217,000
Income deciles
306,000
Types of household
56
29
11
663,000
Single, 65 or older
49
38
11
407,000
53
39
169,000
76
22
118,000
69
28
94,000
80
18
188,000
Total
59
31
1,639,000
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J Hous and the Built Environ (2015) 30:293312

Housing affordability in the Netherlands: the impact

M. Haffner (&) H. Boumeester

Housing affordability in the Netherlands

Average gross rent

Gross rent (monthly)

(Above 849 Euro)

Number and share of all

Source CBS, WoON 2012; calculations by authors

Gross rent per montha

Rental dwelling with

Net rent ratio = net rent/disposable

?Necessary incidental expenditureb

Total housing expenditure

Total ratio = total housing expenditure/

Necessary incidental expenditure includes expenditure on energy

2 From rent- to-income ratio to residual income

Housing affordability in the Netherlands

Renting a dwelling with

Single, younger than 65

Single-parent family, younger

Couple, younger than 65

Couple with child(ren), younger

Couple, 65 and older

Renting a dwelling with

Single, younger than 65

Single-parent family, younger

Couple, younger than 65

Couple with child(ren), younger

Couple, 65 and older

The concept of residual income is widely applied in settings where a household is

3 Poverty due to housing and energy expenses

Housing affordability in the Netherlands

Housing affordability in the Netherlands

Minimum income and above

Single, younger than 65

Single-parent family, younger

Couple, younger than 65

Couple with child(ren), younger

Couple, 65 and older

Single, younger than 65

Single-parent family, younger than 65

Couple, younger than 65

Couple with child(ren), younger than 65

Couple, 65 and older

Housing affordability in the Netherlands

Single-parent family, younger than 65

Couple, younger than 65

Couple with child(ren), younger than 65

Couple, 65 and older

8 Housing and energy poverty combined

Housing affordability in the Netherlands

9 Possible causes of affordability problems

Above median square

Above median electricity

Above median gas

Housing affordability in the Netherlands

Housing affordability in the Netherlands

Telephone, tv, internet

Membership fee, subscription

Other recurring expenses in total

Clothing and shoes

Interior, maintenance house and garden