Renters use more income for Dutch housing than homeowners as gap widens

The gap between homeowners and renters has widened, as renting a home in the Netherlands often requires a larger share of a resident’s income than a mortgage payment. The silver lining is that due to rising incomes, housing affordability has improved overall.

Widening gap between Dutch homeowners and renters

ABN AMRO’s most recent Housing Market Monitor has revealed that the divide between homeowners and renters on the Dutch housing market is growing. Renters often have to spend more of their income on housing than people who own their homes.

While homeowners spend around 20 to 28 percent of their income on housing costs, tenants end up paying significantly more at 28 to 38 percent. This situation is worsening, particularly for younger renters in Amsterdam, Rotterdam and Utrecht. 

However, even if renters want to buy a house in the Netherlands, it is not easy. “We see that there is a significant income gap between the private rental sector and the owner-occupied market. As a result, the transition from renting to buying is becoming increasingly difficult,” says Mike Langen, Senior Housing Market Economist at ABN AMRO.

The average Dutch rent costs over 1.800 euros per month, which requires a monthly income of over 5.500 euros. The average gross salary is around 4.000 euros per month. With such a large chunk of a person’s income dedicated to paying rent, it can be difficult to save the 160.000 euros that is often needed to buy a house. 

Affordability of Dutch housing improves

According to the Dutch bank, housing has actually become more affordable since 2019. While housing prices have risen, incomes have increased faster, outpacing mortgage and rental costs. 

"This is particularly evident among existing homeowners," Langen told AD. "Their incomes have risen over the years, while their mortgage payments remained the same or decreased. As a result, this group can spend 2 to 3 percent of their net income on other things."

However, the gap in affordability and housing quality in the market is still evident. “Who benefits on the housing market depends increasingly on age, type of housing, and the region where someone lives,” states the report. 

Part of the reason rental homes are so pricey is because of the housing shortage, which has been exacerbated by landlords selling off their rental properties after the introduction of the Affordable Rent Act. The Dutch government recently announced plans to relax these rent regulations to make renting out properties more attractive. The downside to this is that landlords will be able to charge higher rents, which means tenants could be paying even more for housing.