a.s.r. real assets has published a new white paper entitled "Refining affordability in the Dutch residential rental market". The study analyses the increasing importance of differentiated affordability concepts in the Dutch housing market and develops a practice-oriented approach to defining affordable housing. The focus is in particular on institutional investors who want to invest in residential real estate on a long-term basis and at the same time take into account societal requirements for affordable housing.
As affordability has become a key issue for both investors and politicians, the definition of affordable housing rents is also becoming increasingly important. The starting point of the analysis is the finding that the Netherlands continues to face a structural housing shortage of more than 400,000 housing units. At the same time, rising purchase and rental prices are making access to housing more difficult for broad sections of the population.
Robbert van Dijk, Fund Director of ASR Dutch Core Residential Fund, explains: "Our approach provides our fund and its investors with a robust and practical basis for making responsible, long-term investment decisions while benefiting from the undersupply in the affordable housing segment."
The white paper comes to the conclusion that flat-rate rent limits are not sufficient to reflect the actual affordability of housing. Instead, a.s.r. real assets proposes a multi-layered approach that takes into account regional income differences, energy costs, municipal taxes and service costs in addition to disposable household income.
The model focuses on a housing cost ratio of 35 percent of disposable household income as a starting point for assessing affordability. This approach is supplemented by local income data at the level of functional housing market regions and by the consideration of structural ancillary costs. The analysis shows that the actually sustainable net cold rent differs significantly from blanket market definitions in many cases.
