The Netherlands offers highest tax relief for homeowners in Europe, reports OECD
According to the Organisation for Economic Cooperation and Development (OECD), the Netherlands offers the highest tax relief for homeowners in Europe, which has caused a rise in inequality among residents. In its annual report, the organisation claims that reducing incentives to own a home, such as mortgage interest deductions, would increase the affordability of Dutch housing.
Homeownership incentives responsible for high prices of Dutch housing
“The Netherlands is facing a significant housing challenge, marked by persistent supply shortages, affordability concerns and an imbalance between housing tenures,” wrote the OECD in the 2025 economic survey report. The OECD also stated that the current housing policies favour homeownership over renting, which affects the balance of the housing market and raises prices.
One of the main factors behind the high housing prices experienced in the Netherlands is thought to be mortgage interest deductions and other homeownership incentives. “Generous tax incentives, including tax deductibility of mortgage interest payments, combined with low taxation of imputed rents, exemptions from capital gains taxes, state guarantees for buyers, and high loans-to-value mortgages have promoted homeownership as a favourable investment, driving up prices and widening wealth inequalities.”
Based on OECD figures, the Netherlands offers the highest tax relief for homeowners among all 38 member countries, and almost double that of Chile, which has the second-highest tax relief. Not only do homeowners have lower housing costs than renters due to the incentives, but other policies introduced, such as the Affordable Rent Act and bans on buy-to-let properties, mean that the housing supply is dwindling further, making it harder for low and middle-income earners to find an affordable home to rent.
Reforms to Dutch housing policies to improve affordability and supply
The OECD encourages the Netherlands to shift from encouraging homeownership to increasing housing supply so that affordability improves. “Generous tax incentives for homeownership should be gradually reduced, and supply could be boosted by streamlining permitting and land-use policies.”
According to the international organisation, the government also needs to come up with a long-term strategy to strengthen the private rental sector with a clear timeline for phasing out rent controls and the ban on buy-to-let properties. These policies make it unattractive to invest in the private rental sector, decreasing the supply of housing and ultimately driving prices up. This leaves many residents who can't afford to buy homes with high rents.
Recent proposals from the government seem to be moving in the right direction. The government plans to pay municipalities for every affordable home they build from 2026, and building regulations will be relaxed to build cheaper housing more quickly.