Studies on Dutch Housing Corporations

One third of all dwellings in the Netherlands is owned by housing corporations. These are privately governed institutions executing a public task (social housing). Recently, corporations have received negative attention due to various incidents (such as fraud and excessive risk-taking). This put pressure on their position. This dissertation focuses on three important issues for corporations: efficiency, mutual solidarity and rent setting. Because corporations cannot appropriate profits, they lack an incentive to operate efficiently. Also, the ties between corporations and the government have loosened in recent decades and competition among corporations is limited. We find that – on average – corporations could reduce current expenditures by about 30 percent. Also, the merger wave of the last years seems to have made corporations inefficiently large. Although corporations do not receive subsidies anymore, they can still borrow under guarantee of a bailout clause. Despite the risk that this may lead to moral hazard, the clause still functions. We find that it yields yearly benefits of about 0.7-1 billion euros in reduced interest. This clearly outweighs the annual payments of 68 million euros (between 1990 and 2012) to rescue corporations. A corporation’s rent (increase) is legally constrained by nation-wide maximum rates. A rent increase above the maximum rate is only allowed in case of new tenants or quality improvement. However, we find that the rent/quality ratio decreases if quality is improved. Thus, quality improvements are not used to obtain extra revenues. Finally, we find that rent increases partly depend on rent increases of neighbouring corporations