What is the Dutch case?

In a letter of the 14 July 2005, the European Commission expressed doubt on the compatibility of the Dutch social housing support systems with the Competition rules, identifying a possible “manifest error”. For the Commission, the fact that more than 30% of the housing stock is owned by bodies that receive state aids in the form, mainly of guarantee seems disproportionate with the aim to house “the most vulnerable”. The final answer took more than 4 years, due to high and intense political debates in the Netherlands, and change in Minister in charge. The European Commission published the agreement on the notification of State aids in December 2009.

What is into the agreement?

The Dutch government introduced an income ceiling of € 33,000 or less per year as an eligibility criteria to access a social housing and clearly stated that the housing corporations (social housing non-for profit providers) should strictly focus on answering the housing needs of the most vulnerable and to built and manage social real estates (with a precise list of what can be included into it). It introduced a maximum rent price of 650€ on the whole territory. The notification is also concerning a major urban renewal programme where 250€ millions should be invested in the next 10 years in 40 targeted areas. Social housing provision stays under the article 106 TFEU when the urban regeneration scheme has been approved under the 107 TFEU.

What can we conclude?

Basically, the universal approach of housing provision policies, does not fit into the current EU competition rules, it is the basis of the problem in the Netherlands. The question today is to know whether the protocol on SIEG does or not open doors for universal approach, meaning that housing policies should not be targeted to provision to the most vulnerable only, but can be focussing on a wider role and more holistic missions. This highly political question will be answered by the new Competition Commissioner and the new European Parliament but we don’t know in what form. It can be with a renewed and more open/flexible exemption of notification of state aids in the social housing sector, with a broader directive on SIEG and the subsidiary principle, which would be recognition of the specific position of SGEI providers and the need to adapt regulation.

Are housing corporations really advantaged?

The EU decision fails to take numerous issues into account. Contrary to other (commercial) market parties, associations are obliged to maintain good living conditions, and they invest millions of Euros in this each year. To a certain extent, other market parties also benefit from the associations' investments.
The vast majority of the association sector, with the exception of the associations that operate in the 40 deprived neighbourhoods referred to as ‘krachtwijken’, pay millions each year to help tackle these 40 neighbourhoods. This too benefits the market parties with properties in these neighbourhoods.
Association are subject to taxation within the framework of corporation tax. In contrast to commercial investors, they may not have the fiscal status of an investment institution. Therefore they do not have the benefits of a fiscal investment institution, for which corporation tax is set at 0%. Clearly this is a competitive disadvantage. The support which the associations receive from the government consists mainly of guarantees for loans. The value of this support is much lower than the unprofitable investments of social activities by the associations, such as building public-sector rented accommodation.

What’s at stake?

The average price for a single-family house in the Netherlands is € 209,000. Rented housing costing more than € 648 euro a month is in very short supply, making up just 6% of all rented accommodation. With the EU decision, only single-income households (with a gross annual income of less than € 33,000), senior citizens with a very small pension and people on benefits will be eligible for public-sector rented accommodation, according to the housing associations. People with middle incomes who live in public-sector rented accommodation now are already less inclined to move to slightly more expensive accommodation, which frees up less room for first-time renters. Ria Koppen, Director of Operations for housing association Haag Wonen, commented “The consequences will be felt immediately by starters in the housing market, but the long-term effect will be disastrous for multiple groups. Allocation according to income will lead to income neighbourhoods and thus to segregation. And the major regional differences are not being taken into account.” The associations build a large proportion of homes. Therefore the decision will also bring construction to a standstill, which is bad news for all tenants in the Netherlands.
The decision will mainly affect modest middle-income households. As a result of the decision, approximately half a million households in this category are in danger of falling into the wide gap between the rental and home ownership market.

Taking action

On the 30th of April, 133 Dutch social housing organizations filed an objection to the decision of the European Commission. The objection of the 133 housing associations is supported by CECODHAS HOUSING EUROPE, together with Woonbond (Netherlands Union of Tenants) and Aedes (Dutch association of social housing organizations). CECODHAS HOUSING EUROPE also organised on the 8th of April a breakfast seminar on State Aid, where the Dutch case (together with the Swedish Case regarding municipal housing companies and the rent setting system) was presented to the participants, including 4 MEPs.

Third parties as well as EU and EEA member states have the opportunity to intervene during the procedure. An application to intervene must be made within six weeks of publication of the notice in the Official Journal of the EU (OJ) of the date of registration of an application initiating the proceedings. After the expiry of this six-week period, it is also still possible to file an application to intervene before the decision to open the oral procedure (if there is an oral procedure, as is usually the case). The application has to be lodged in the language of the case. Member States, however, are entitled to use their own official language.

The Court's Rules of Procedure and the case law give further guidance on when an intervener will be considered to have an interest to intervene - i.e an interest in the outcome of the case. This will depend on the identity of the intervener and will have to be examined on a case by case basis. Note however that EU and EEA member states (i.e Norway and Iceland in particular) are ‘privileged’ interveners and do not have to establish an interest in the outcome of the case as such. 

> For more information, please contact: Ria Koppen – Kreyne, Operations Manager, Haag Wonen through Esther Clason, Communication, Haag Wonen, tel. nr. +31 (0)6 388 269 30 or
+31 (0)70 388 04 51