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Master thesis

Master Urban and Regional Planning

Author: Mike Seegers

Student number: 10333819

Date: June 26, 2017

Title:

The death and life of Great Amsterdam affordability:

The provision of affordable housing by the private rental sector in Amsterdam?

Supervisor: Dr. M.T. Tasan Kok Second reader: Dr. J. de Vries

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Outline

1. Introducing Amsterdam’s affordability gap: Why the private rental sector should provide more

affordable housing ... 4

Problem statement ... 6

Scientific and societal relevance ... 6

Research questions and structure of the research ... 7

2. Theories on the provision of affordable rental housing and the private rental sector ... 8

The gap to fill for the private rental sector ... 8

2.1 Methods of affordable housing provision ... 9

Unitary and dualist rental markets ... 9

Supply- and demand-side subsidies ... 9

Demand-side subsidies ... 9

Supply-side subsidies ... 10

The poverty trap ... 11

Regulations to achieve sufficient supply of affordable housing by the private rental sector ... 11

2.2 What is affordable? ... 12

3. Affordable housing in Amsterdam ... 14

3.1 The case of Amsterdam ... 14

3.2 Definition of concepts ... 15

What will be considered affordable housing ... 16

Establishing the maximum rent for affordable housing in Amsterdam ... 16

The private rental sector ... 17

4. How to research the constraints and possibilities for the private rental sector ... 19

Case study approach ... 19

Research type ... 19

Data collection methods ... 20

Interviews... 20

Approach to sensitive information ... 21

Interview format ... 21

Method of analysis ... 22

5. The findings ... 25

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Land prices ... 25

Land supply ... 27

Funding the private rental sector ... 29

Opportunism ... 30

Regulations ... 31

Housing policies ... 32

5.2 The possibilities for the private rental sector in Amsterdam ... 34

Affordable rents are possible ... 34

Collaboration... 36

Inclusivity ... 38

Regulations and subsidies ... 38

Subsidizing... 39 Regulating ... 40 6. Conclusions ... 43 Recommendations ... 45 7. Reflection ... 46 8. References ... 47 Websites ... 51 9. Appendix ... 52

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1. Introducing Amsterdam’s affordability gap: Why the private

rental sector should provide more affordable housing

Amsterdam used to be a very affordable city to live. After WWII it build up a large social housing sector offering housing for a wide range of income-groups and encompassing almost 60% of the housing stock in the late 1980’s. The total housing stock was characterized by relatively stable prices and affordability. Amsterdam was long considered: ‘’A prime example of a ‘European city’ and a ‘just

city’.’’(Kadi, 2014; Fainstein, 2010).

This has rapidly changed as home-ownership, housing prices and rents have increased. If the newspapers are to be believed, Amsterdam is quickly becoming an ‘amusements park for the rich’, in which there is no room for middle and lower income groups, except for some neighborhoods far from the city-center (Volkskrant; The Guardian; NRC). Small residential units are being sold for tremendous amounts and homebuyers try to get access to the few houses that are still available in the market (Parool, 2017). And although these are extreme examples with little room for nuance, there is, without doubt, a lot of dynamics in the Amsterdam housing market that makes it less affordable. The amount of social housing is decreasing due to new policies that limit the sectors abilities to develop new housing (Ronald, 2013; Van Gent, 2013; Woningwet, 2015). At the same time, prices to buy a home or to rent in the private rental sector are continuously increasing, making it for larger groups of people unaffordable to life in Amsterdam (Savini et al, 2016). These two dynamics, on the one hand the decrease of social housing supply, and on the other hand the rising prices to rent a house, creates a gap in the rental housing provision.

Although these tendencies occur in more cities in the Netherlands, Amsterdam is an extreme case with rent-levels unthinkable in other places in the Netherlands. The city is faced with a high demand for private rental sector housing for middle-incomes, but the supply is insufficient to say the least (Gemeente Amsterdam, 2016). This makes for an interesting case with real and relevant consequences: so many people want to live in the city of Amsterdam, yet more and more people can not afford to, how can such a mismatch between demand and supply occur?

This gap is increasingly considered as problematic as larger groups of people are either unable to enter the housing market in the place they want, or are priced out of their dwelling to other cities further away. The group that is affected the most is the lower-middle and middle incomes. These groups are often not eligible to social housing due to their income but can not afford regular rental housing either (Boelhouwer, 2013). Furthermore, they often can not buy a house due to their flexible or uncertain nature of work. As the demand for a flexible workforce will increase continuously more due to continuous globalization and changing technology, and labor contracts are more often temporary, the need for accessible rental housing will only grow (Burri, 2009; Schmid, 2000). Yet in Amsterdam, where demand for housing has been high for many years now, and the population keeps on growing, rents are pushed upwards due to the high demand and only expected to stabilize in 2025 (Gemeente Amsterdam, 2016).

Amsterdam in the 21st century is known to have a complex and highly regulated housing market. Interventions in the housing market are difficult due to restricted powers of municipalities and national policies. On a local level, the situation is complex due to the limited supply of land, the land-lease system (erfpachtstelsel) and limited possibilities to intervene (Savini, 2017).

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The provision of affordable housing can be done by either public-, semi-public organizations or the private rental sector. Furthermore, there is a strict separation between social housing and other forms of housing in the Netherlands. Therein a distinction has to be made between ‘regulated’ and ‘unregulated’ dwellings. In the Dutch context, every dwelling with a monthly rent under €710,68 is subject to a regulated rent that is established on factors like size, quality and amenities with the ‘dwelling-valuation-system’ (woningwaarderingsysteem). Regulated dwellings are subject to more strict regulations on rent increases and rent levels are determined by the government (Woningwet, 2015). This thesis will solely research the provision of affordable housing by the private rental sector, but includes both regulated and unregulated dwellings. The exact maximum under which shall be considered affordable in this thesis is €906,50, this number will be further explained in chapter 3. In the Netherlands as a whole, 10,5% of all dwellings are in the private rental sector. In Amsterdam, this percentage used to be higher but has quickly decreased (Van Gent, 2013). For 2016, it was estimated that only 9% of the housing market in Amsterdam consisted of dwellings in the private rental sector. This is due to small landlords selling of their rental housing for owner-occupied housing (Interview 5). This percentage is now slightly increasing as an effect of rising rents in the city. The problem that is even more eminent, however, is the price-level of dwellings in this sector. While rents per square meters on a national level are around 10 euro’s, and other cities in The Netherlands such as Den Haag and Rotterdam have square meter rent levels between 13 and 14 euro’s, the rent per square meter in the capital surpassed 22 euro’s in the beginning of 2016 (Parool, 2016). When one searches the internet for rental housing in Amsterdam, it is hard to find a dwelling with a rent below €1000. In searching for rental housing on the internet, one website gave 37 results with rents below €1000, on a total amount of rental dwellings in Amsterdam of 1844 (Pararius, 2017). In another search, 150 out of a total of 1303 dwellings were offered for a rent up to €1000 (Funda, 2017). The municipality estimated that the average monthly rent for newly offered rental housing was €1100 in 2016, and within the ring road rents up to €1500 can easily be asked (Gemeente Amsterdam, 2016). This is creating problems for middle-incomes who wish to stay or move to Amsterdam. Households with an annual income between €34.000 and €38.000 can afford a maximum rent of €690 according to the ability-to-pay method (NIBUD, 2016). Nevertheless they are hardly eligible to social housing and are designated to the unregulated private rental sector where rents are much higher. Even households with incomes that are 1,5 times the average, and therefore are able to pay rents up to €950 will have a hard time to find a rental house with average rents of €1100. The search for affordable rental housing is further complicated by income requirements posed in the private rental sector. One should annually earn 50 times the gross monthly rent, of 75 times the gross monthly rent for couples, to be eligible for renting in the private rental sector (Gemeente Amsterdam, 2016). This makes it very hard for middle incomes to find a place to live in Amsterdam, yet it is unclear what is restraining the private rental sector to supply these much desired, and needed, rental dwellings.

Examples from other countries show that this does not have to be the case. There are many ways to organize the rental market in a manner that does create enough affordable housing. The private rental sector is in principle capable of serving a very wide range of income-groups. This thesis will seek to find an answer on the question what is limiting, and what are some possibilities for the private rental sector in providing affordable housing in Amsterdam.

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Problem statement

Even though there is not enough empirical research on the provision of affordable housing by the private rental sector, general tendencies and theories on the private rental sector in Europe have been widely elaborated on by many scholars.

Recent policies have limited the provision of affordable rental housing in favor of less accessible home-ownership (Vlak et al, 2017; Uitermark, 2009). The private rental sector(hereafter also mentioned as PRS) is theoretically capable of providing large amounts of affordable housing. In the Netherlands, however, the role of this sector is small encompassing only 10% of the housing stock, of which most affordable dwellings are outside the cities (Rijksoverheid, 2016). The sector, like in many other European countries, used to be quite large. Especially in larger cities were many households with lower incomes had no choice but to rent in the PRS. Yet after WWII, rental sectors throughout Europe became heavily regulated, leaving little space for companies to make a profit and leading to little interest to invest in this sector (Kadi, 2014). The sector remained more visible in cities, but served, in many contexts, for better-off citizens who can afford high rents (Uitermark, 2009; O’Sullivan & De Decker, 2007). Yet there are possibilities to provide affordable housing in the private rental sector. Examples from Germany and Austria, but also Australia show different methods to maintain affordability in the sector. Using mainly regulations and supply-side subsidies in the first two, and demand-side subsidies in the latter (Ulbrich & Wullkopf, 1993; Hulse & Pawson, 2010). Methods like these might also be a solution in the Amsterdam context to generate more affordable housing in the sector. However, the limitations and possibilities in the current situation need to be researched first.

Scientific and societal relevance

It is clear from the literature that a larger provision of affordable housing by the private rental sector is theoretically possible. Having this as the starting point, the aim of this thesis is to understand the possibilities and barriers for the private rental sector to provide affordable housing in Amsterdam Unaffordable and inaccessible housing needs to be researched as an imminent societal problem, which has many implications for the residents of Amsterdam, and for the country as a whole. Numerous experts underline the possible consequences of inaccessible housing markets in larger cities (Haffner & Boumeester, 2010; Kadi & Musterd, 2015; Kempen, Teule, & Weesep, 1992; Ronald & Dol, 2011; Savini, Boterman, van Gent, & Majoor, 2016). The exclusion of middle-income families from neighborhoods due to a shortage of affordable housing supply can lead to segregation not only between neighborhoods, but cities as a whole, as this group is priced-out of the city. The households that manage to rent a dwelling in the city often face rents that are too high to maintain a certain quality of living (Gemeente Amsterdam, 2016; Haffner & Heylen, 2010). Middle-incomes residents are facing real problems with regard to their housing options as they are often not eligible for social housing but cannot afford to buy or rent a house (Interview 8). Therefore, this thesis possibly can be a modest contribution in elaborating on possible solutions for the increasingly inaccessible and unaffordable housing market. For, however, the subject of high rents in the rental sector is often dismissed as regular supply- and demand mechanisms that will be solved when the supply is high enough, the housing market is too heavily regulated and subsidized to reach an equilibrium on its own. This research is contributing to the academic field of affordable housing in relation to private rental sector supply mechanisms. It possibly contributes in generating more knowledge about this topic in the context of an enduringly strong, yet decreasing, social housing sector.

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Research questions and structure of the research

What are the limitations and possibilities for providing affordable housing by the private rental sector in Amsterdam?

The argument of this thesis is that the private rental sector is mainly providing for higher income groups in the city and is limited in its provision of affordable housing. Yet it is unclear which factors create these limitations, and which possibilities there still are in the current circumstances. The thesis is designed as an explanatory research, which seeks for the factors that limit and enable the private rental sector to provide affordable housing.

In order to find out how the current system is functioning, what is limiting, and what is enabling the sector, the following sub questions are established:

• What conditions are limiting the private rental sectors capabilities to supply affordable housing?

• Which conditions are enabling the private rental sector to still provide some amount of affordable housing, and how can these possibilities be more effectively used?

In order to answer these questions, policy documents and literature on the provision of affordable housing in the rental sector have been studied, and interviews have been conducted with experts on the topic, private rental sector actors, interest groups, and policy makers.

The thesis begins with the theoretical framework to give an overview of the already established theories and academic discussions on the subject. After elaborating on the gap that has arisen between the social housing sector and the private rental sector, the specific characteristics that create the context for the private rental sector in Amsterdam are discussed. This section is followed by an overview of the way that rental markets can be organized. Intrinsically, a divide can be made between unitary markets and dualist rental markets. Subsequently there are different forms of organizing the rental market via supply-side subsidies, demand-side subsidies, and regulations, and often a combination of these. This part is succeeded by a theoretical discussion on different methods to consider and establish affordability. The last part of the theoretical framework is concerned with defining the concept of affordability and what will be considered as affordable in this thesis, and defining the private rental sector in Amsterdam.

This theoretical part is followed by a section on the research itself and the methods that are used to collect the data. A case-study approach will be used as it entails the detailed and intensive analysis of a single case: the private rental sector in Amsterdam. This is followed by a description of the research type and the way that the data will be collected. This will primarily be done by interviewing actors and experts in the field of the private rental sector in the Netherlands.

After these sections, the empirical findings can be presented. This will happen by elaborating on the sub questions as described above. First the limitations for the sector are described, followed by the possibilities.

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2. Theories on the provision of affordable rental housing and the

private rental sector

In this section theoretical work will be elaborated on with a literature review on the subject of the provision of affordable housing by the private rental sector. Firstly, the gap that has arisen between the public housing sector and the owner-occupied housing will be explained. This part explains the problem that could possibly be solved by the private rental sector. Continuously, different theories on the way affordable housing can be provided by the PRS are discussed. In general, rental markets can be distinguished between unitary and dualist. There are a few methods to make rental housing affordable. These are by giving supply-side or demand-side subsidies, by regulations, or by a mix of these. Lastly, it will be discussed what can be considered affordable, and what are some methods to establish affordability.

The gap to fill for the private rental sector

Especially in larger cities, housing markets are inflexible and there is a considerable gap between social housing and market housing provision. As social housing agencies are limited in their ability to provide housing for a wider range of income groups, and they have to compete for building sites with other developers, a gap between hardly accessible social housing, and ‘regular’ housing appears (Gibb, 2010; Priemus & Kemps, 2004; Savini et al, 2016). At the same time, land prices are rising in cities due to continuous demand and a lack of supply. Therefore, market parties face high initial costs that have to be turned into profits eventually, thus leading to high prices. This could theoretically be tempered by supply-side subsidies for the private rental sector, but this has not occurred. Rather, governments pursue a political agenda that promotes home-ownership (Ronalds, 2013). Furthermore, many countries in Europe have retained a system of rent control which naturally discourages private investment in the private rental sector. This can be seen as paradoxical, since governments are concerned with inflexibilities in the labour market and renting provides more flexibility (Kemeny, 1995; Priemus & Dieleman, 2001; Doling & Ronald, 2009). Thus, households in cities that have a low- to medium income, are unable to purchase a dwelling or afford the high rents in the PRS, and are therefore forced to turn to the social housing sector. But even there, there might be no place for them due to eligibility criteria and waiting time. If for example, a household in Amsterdam with a medium to low income is looking for a place to live in Amsterdam, their income is likely to be too low to afford buying a house or to rent in the PRS (this is also due to the income-requirements in the PRS which will be discussed later), thus they are forced into the social housing sector. Which has an approximate waiting time of over 10 years (Elsinga et al, 2009; Woningnet, 2016).

Figure 1: Depiction of the gap that has arisen in the rental sector between the social houisng sector and the private rental sector. Source: Author, 8-3-2017.

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2.1 Methods of affordable housing provision

Housing is very much context specific, and it differs from country to country. Therefore, although much is written on the subject, there are little general theories. More often, the literature consists of descriptive or comparative case-studies. Nevertheless, there are some theories that apply to the subject in general. Firstly, rental markets can be divided between unitary and dualist. Continuously, a division between methods to keep rental housing affordable can be made between supply-side and demand-side subsidies, or in using regulations.

Unitary and dualist rental markets

Firstly, a distinction can be made between unitary and dualist rental markets. Kemeny (1995) made a difference between the systems on the degree of competition between the profit-oriented and non-profit rental providers such as a social housing association. In an unitary market, there are no boundaries or regulations separating the two forms of providers from each other. They are free to compete with each other for the same tenants, although having a different way of financing. In the dualist market, there is a strict separation between the profit-oriented and non-profit rental providers. It is regulated for whom and under what conditions the non-profit rental providers are letting property and it is ensured that this sector does not compete with the regular market. An example of a dualist market is Australia, where the rental market exists of a relatively large and unregulated PRS and a small and heavy regulated social housing sector. The social housing sector serves as an ambulance service for those who are temporarily not capable to find a dwelling in the market due to unemployment or people who suffer from physical or mental problems (Hulse & Pawson, 2010). An example of a unitary market can partly be found in the Netherlands, although less so since the new Housing Law (Woningwet) (2015). In the Dutch case, there is no strict division between the non-profit social housing sector and the profit-oriented PRS. Social housing associations were allowed to supply above liberalization-limit dwellings, and the PRS can also supply dwellings with social rents, although not common. Even with the new law, it was meant to make a more strict division between the two, social housing associations are still allowed to build above liberalization-limit dwellings if the market cannot deliver (Woningwet, 2015).

Supply- and demand-side subsidies

Secondly, a division can be made between supply-side or demand-side subsidies. In theory, there is a supply-demand equilibrium in the market, leading to the appropriate supply of goods for the right price. Unfortunately, the housing market does not work that way and has to be altered in order to supply everyone with decent housing. The market is striving for profit, and especially in cities with ongoing demand this would lead to undesirable effects such as segregation and the exclusion of lower income-groups. Therefore, government intervention in the housing market is needed. This can either be done by supply-side and demand-side subsidies, or by regulations.

Demand-side subsidies

Especially in countries with an advanced stage of neoliberalism, where market dynamics define the policy agendas, demand-side subsidies are common. Yet also European countries with more aspects of the welfare state know this form of subsidies, however often combined with supply-side subsidies and regulations (Ronald, 2013). In having demand-side subsidies, the market itself is not disturbed as eligible households are given subsidies (often in the form of vouchers) to be able to afford housing in the PRS. In light of the welfare perspective theory, suppliers of housing have to compete with each other in order to attract the recipients, leading to the best result for the governments aid (Priemus &

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Dieleman, 2001). Some possible advantages of demand-side subsidies are the competition between all sorts of housing providers (applauded in neoliberal policies), the prevention of stigmatization as recipients can theoretically afford the same housing as some non-recipients, and less government intervention (Hulse & Pawson, 2010; Retsinas & Belsky, 2008; O’Sullivan & De Decker, 2007).

Some disadvantages can also be identified. Haffner and Boelhouwer (2006) found three economic inefficiencies that concern the demand-side subsidies. The first is that it might be a disincentive to work. As a housing subsidy is income-dependent, people are not stimulated to make more money as their subsidy will decrease. Usually, a step-by-step mechanism is used as a reduction rate when income increases. The extent to which this rate is equal to extra generated income determines the disincentive-effect: ‘The steeper the rate, the better targeted the subsidy will be, the faster it will be

withdrawn as gross income rises, and the deeper the poverty trap or unemployment trap will be for a beneficiary’ (Haffner and Boelhouwer, 2006: 947). The second inefficiency lies in the shopping incentive that arises when the subsidy fluctuates between dwellings. Recipients might be triggered to

choose for a dwelling with the largest subsidy in order to pay less from the household income. When more subsidy is given for properties with higher rents, this might be attractive due to the optimization of beneficiaries, hence risking to overconsumption on housing. A third weakness is the horizontal economic inefficiency. This is the difficulty that arises in trying to cover all the eligible households. If not all needy households are reached, due to limited budget or information, or needy households do not fit the eligibility criteria, the demand-side subsidies do not function properly. Other authors identify problems regarding to the lack of control on the markets. If the prices for renting are increasing, so should the subsidies. Hills (2007) is giving the example of London, where rents have more than doubled, and the subsidies need to be increased every year. In those circumstances, the advantage of competition between providers and the best value for money for the government voids. Although London can be seen as an extreme case, rising rents are a problem faced in many popular cities, possibly making demand-side subsidies less efficient. Another disadvantage arises when the competition between suppliers leads to a so called ‘race to the bottom’, whereby suppliers offer the exact minimum requirements needed to accommodate the recipients. This results in recipients living in worse circumstances than in social housing (Hills, 2007; Hulse & Pawson, 2010). This problem, however, is possibly avoided by stricter regulations.

Demand-side subsidies often come in the form of income- and rent dependent allowances. The best known examples of this system are found in the United States with its vouchers that leave much space for suppliers to compete and the United Kingdom with its housing benefits system which has a bad reputation in regard to the poverty trap. There are more differences in the freedom in which the subsidy can be spent, e.g. the German wohngeld which is available for all low-income groups and can be spent on all sectors versus the Dutch huursubsidie which is only for strict income groups in the regulated rental sector (Hills, 2007; Haffner & Boelhouwer, 2006).

Supply-side subsidies

More often used are the supply-side subsidies. Especially in welfare-states, this form is most widely used. These are given to the providers of affordable housing, and come in many forms. Often are these ways to make the development and supply of affordable housing possible. This can be done by subsidizing construction, distributing land for lower prices, or giving a subsidy per dwelling let, or low-income household given a dwelling.

The advantages of supply-side subsidies are mostly in the amount of control that governments maintain for implementing social and spatial policies, as well as controlling quality standards and the recipients. By giving subsidies to the rental housing sector, governments remain in control and are able to use the sector for other policies. In some countries this power is used for socially integrating

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neighborhoods and preventing segregation, e.g. the Netherlands and Sweden (Whitehead & Scanlon, 2007). In other countries, this power over the rental housing sector is used to pursue economic goals. By investing in the rental housing sector, and encouraging construction, governments hope to stimulate economic growth (Smith, 2015). Another advantage of remaining in control lies in the demands that governments can have regarding quality and users (Lennartz et al, 2012).

Disadvantages of supply-side subsidies arise due to the sometimes undefined use of the subsidies. As events in the past few years in the Netherlands have showed, is it possible that housing associations employ subsidies for unintended activities with potentially more financial risks (Priemus & Gruis, 2008). Another disadvantage arises due to the subsidy given for letting a property at an affordable rate. It does not guarantee that it is used by these households that need it most, as contrary to demand-side subsidies. This also has implications for the inclination to move to unsubsidized dwellings. Once people are in the sector with high-quality dwellings for an affordable rate due to subsidies, households are logically not keen to move to more expensive regular housing. This is creating one of the reasons for the limited accessibility of this sector with long waiting lists in some cities (Lennartz et al, 2012; Elsinga et al, 2009; Jonkman, 2013).

The poverty trap

One general disadvantage for both supply- and demand-side subsidies is found in the poverty trap. These subsidies, and especially the demand-side subsidies, have a very negative impact on incentives to work and save. Whilst recipients are trying to escape poverty by finding a better job, or saving money, their subsidy decreases leading to a very small net improvement (Hills, 2007). For demand-side subsidies, the same can be the case when the right to rent a certain subsidized dwelling expires when a households income increases. Although less apparent in the welfare-state, neoliberal policies create a poverty trap in decreasing the social sector and making it increasingly limited to certain lower-incomes (Woningwet, 2015; Haffner & Boelhouwer, 2006). Incentives to work are punished by lowering benefits or discontinuation of the right to rent in the social sector, thus creating less social mobility. This can also be seen as another argument for providing more affordable housing outside the social housing sector, as this can mitigate the poverty trap by giving housing options for households that are just starting to generate more income and are trying to escape poverty.

Regulations to achieve sufficient supply of affordable housing by the private rental sector

Instead-, or in addition of giving subsidies to create affordable housing, regulations can be used to achieve this goal. As the social housing sector used to be capable of providing enough affordable housing in most European countries, there was no imminent need to regulate the PRS. Yet this sector is often not inclined to supply affordable housing without financial incentives or regulations. These are private companies in search of making a profit, thus with sufficient demand they are more likely to focus on renting dwellings with higher rents, as the possible profit is higher there (Hulse & Pawson, 2010; Kemeny, 1995, 2005). Thus, in most cases, regulations are needed to move the PRS to supply more affordable housing. These changing regulations, however, are not necessarily punitive or forcing, but can also be enabling for the PRS (Lennartz et al, 2012).

Regulations that are enabling the PRS to supply more affordable housing are not widely used, and differ much from country to country, yet some can be identified. One possible regulation is a fixed percentage of dwellings in a spatial plan with a affordable housing in the PRS. Just like social housing can be named a certain land-use now in the Netherlands, so could the PRS be a land-use too, preferably with its own land price calculations in order to construct affordable housing. Another possible regulation is a mandatory percentage of affordable housing in projects by the PRS, this in return can be compensated by a subsidy or a discount on the land-price (Priemus & Dieleman, 2001). An example of this can be found in Germany, where there is no social housing sector and the PRS

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alone has to supply all affordable rental housing. In order to receive specific subsidies, providers of rental housing have to house low-income groups for a certain amount of time. At the same time, these households are given housing vouchers to ensure that the housing can be supplied in accordance with market conditions (Ulbrich & Wullkopf, 1993). This makes Germany one of the best examples that show that affordable housing can be provided by the PRS meanwhile ensuring a good quality (Priemus & Dieleman, 2001). Another possible reform in regulations could be the decrease of strict demands for certain dwellings and thereby making it more attractive for investors in the PRS to develop affordable housing, e.g. the abandonment of size requirements for a dwelling and fewer quality demands (Hills, 2007).

2.2 What is affordable?

Affordability is a term much used in policies and media, but is less often defined in an concrete manner. Nevertheless, much has been written on this topic. The most used method to determine whether something is affordable is the Rent-to-income ratio (RIR). In this method, housing affordability is quantified as a ratio of expenditure on housing of the income. This ratio is then used to determine whether a household is spending too much on housing and thus leaves to less money to spend on other needs. This method is used the most due to its clearness and easily accessible data (Revington, 2015; Kutty, 2005; Till, 2005). The appropriate ratio differs from study to study but seems always to be between 25 and 45% of the income. It is hard to establish one definite number as contexts differ so much and a percentage can not tell what is affordable. Also, it makes quite a difference whether a household with a very high income spends 40% of their income on housing, or whether a household with a low income spends the same percentage on housing. The latter will possibly not have enough income left for other basic needs than housing. Since the 1990’s, this method is heavily discussed and critiqued in academic literature. Next to the above disadvantage, there are other problems with this measure. It does not consider concerns of quality. When a household pays 20% of its income on housing it is affordable, but if that house is too small for that household size, or it lacks appropriate quality demands, it does not necessarily say that the appropriate form of housing is affordable for this household (Bogdon et al, 1997; Kutty, 2005). In response to these deficiencies, other methods have been proposed.

Thalmann (1999) proposed a method that includes more variables next to the RIR. In addition to the rent-to-income ratio this method includes a quality-based measure and a housing consumption measure. In order to do so, an average rent for an appropriate bundle of housing in a certain market is calculated. These numbers would give a more qualitative result on the question whether an appropriate form of housing is really affordable for a household. Stone (1993) even went further and came up with a new method that reversed the calculation. He stated that even 20% of income spending on housing can already be too much for low-income households to leave enough to pay for other necessities such as food, clothing and healthcare. He advocates the ‘shelter poverty’ standard,: ‘a sliding scale on which the maximum proportion available for housing varies with income and housing

size and type’ (Bogdon et al, 1997). Partially based on these theories, almost all authors seem to agree

on using the residual income to establish a more realistic view on what is affordable housing in relation to other expenses for households (Hancock, 1991; Kutty; 2005; Revington, 2015).

In the Dutch context, the RIR method and the residual income are both used to establish what is affordable. Although the RIR method, known in Dutch as the ‘huurquote’ (Rent quote), is widely used, its actual indication of whether something is affordable or not for certain households can be considered doubtful (Haffner & Heylen, 2010). A factor that makes a difference is the way in which the ratio is calculated. This can be done on a macro or micro level. In the macro-calculation, a quote

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is calculated on the average income of all households, while in the micro-calculation, the quote is calculated for a wider range of income groups and then the average of these quotes is calculated (Correspondence with dr. M. Haffner, 2017). The latter gives a more realistic number on what is affordable.

Although this number can be effective to establish one maximum for a large group, its simplicity contains three main weaknesses that conceal real affordability for households. The first one is the advantage of economies of scale for larger households. Multiple persons can use one bathroom or television, yet a single household needs those as well and has to pay for it on one income, so a household size influences the reasonable amount that can be spent on housing. The second weakness is the quotes inconsideration towards the total amount of amenities a household needs to fulfill its needs. This amount can differ from household to household and has effects on the percentage of income that can reasonably be spent on housing. The third weakness lies in the exclusion of a minimum quality measure that fits a certain households’ consumption of housing. The ratio might be perfectly fine, but if the quantity or quality of housing is insufficient for a household it can not be seen as affordable (Haffner & Heylen, 2010; Haffner & Boumeester, 2013). The residual income approach, in contrast, is starting with measuring the needed income for a household type to spend on minimum amenities, the proportion of income left over can then be considered appropriate for housing. The disadvantage of this method is however that it can only be measured for very specific groups. Hence nothing can be stated on what range of prices can be considered affordable for larger groups of people. These two methods compared show how another way of measurements can result in an outcome that differentiates completely and is open for an entirely different interpretation (Table 1). As can be seen in de table is 12% of the highest income group who are owner-occupiers living in unaffordable housing according to the RIR quote, while the same group according to the residual income approach is only in 0,4% of the cases considered to life in unaffordable housing. On the other hand, does the residual income approach shows a higher unaffordability for the lowest income group

renters, but a steep decline in unaffordability for all higher income groups. For example the second income group renters has 17,8 % unaffordability according to the RIR quote, and only 4,6% according to the residual income approach. This shows that the way affordability is measured highly influences the outcomes and that numbers on affordability are always open for interpretation.

Table 1: The difference in outcomes between the Rent-to-income ratio and the residual approach. Source: Haffner & Heylen, 2010).

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3. Affordable housing in Amsterdam

3.1 The case of Amsterdam

The housing market in Amsterdam has been rapidly changing in the course of the last 30 years. From the end of the 1980’s on, a tenure shift occurred towards more home ownership. As can be seen in figure 2, there was barely any home ownership in Amsterdam some 30 years ago. Almost 50% of the housing stock was social housing and 52% was in the private rental sector, which was largely privately rented in the regulated sector (Kadi, 2014; Van Gent, 2013). From then on, the percentage of home ownership quickly increased and made a giant leap forwards between 1995 and 2005 with an increase from 6% to 25%. At the same time, the amount of social housing also grew to over 60%. The steep decline was for the private rental sector. It appears as if the social housing sector continues to decline, but agreements have been made between the municipality and the associations that the amount of dwellings should be kept stable from now on (AFWC, 2016). The decrease in the figure can be attributed to the possibility that the other tenures increase even more in absolute figures, or to a wrong projection by the municipality.

The figure also shows an increase in the market rigidity. The share of rental housing in the total housing stock is almost half of its share in 1985. These changes can possibly be attributed to the reinforced market orientation by the European Union. Member states were steered towards open markets and competition between each other and were left with less instruments to steer their housing markets as they could in their former situation. As governments lost some of their power to control the housing markets, cities had to develop new ways to steer the housing production. One of these ways was to create an explicit policy to generate scarcity of building sites to increase housing prices and make inner-city and brownfield developments possible(Tasan-Kok & Korthals Altes, 2012). Social housing grants were abolished in 1995 and they had to find ways to provide affordable housing by using market instruments and large portions of the stock were sold (Figure 2). Although this opening of the housing market to the market is considered positive in neoliberal policies, it also allows for more fluctuations and capital entering the housing market in pursuit of profits (Ronald, 2013). Although the continuing high demand for housing in Amsterdam, combined with an influx of capital, would normally be translated to an increase of supply, this is not the case. The housing market is highly regulated and

0 10 20 30 40 50 60 70 1985 1995 2005 2009 2015 2020 (projection

Tenure shift in Amsterdam

Figure 2: Tenure shift in Amsterdam, showing social housing in red, owner occupied housing in blue and the private rental sector in green. Source: own graphic with combined data from Van Gent (2010) and AFWC(2016).

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building locations are limited (Savini et al, 2016). This makes the housing market to be a market where normal supply and demand mechanisms do not function properly. This creates the situation wherein with a limited supply of housing and building locations, profit must be made for all the capital entering the markets, leading to high price-increases. Governments have to seek for new ways to steer the market towards providing for all citizens and not only for serving the capital. One of these ways is to create hybrid relationships between governments and corporations. In this way, governments and corporations cooperate in achieving goals together, like providing housing. The downside of these collaborations occur in the blurring of distinction between policy-makers and providers, e.g. the creation of a new construction site in a public-park is controversial due to the uncertainty to the fact whether this is in public-interest or corporate interest (Raco, 2012).

Especially cities that experience population growth and ricing housing prices are known to attract much global capital. In 1994, Sassen already described global capital seeking refuge in housing markets with stable and high yields. Amsterdam with its growing population, high-demand for housing and increasing prices is considered interesting by large international investors (Sassen, 2015). Foreign investments in the Dutch housing markets have rapidly increased from 1 billion euro’s in 2014 to 3 billion euro’s in 2016 (BNR, 2016). These investors are especially interested in the middle-segment rental market in larger cities due to its low risk and high demand (INREV, 2014). The effects of global capital on the receiving housing markets is, however, not perceived positive by all researchers. Some argue that the international net capital flows have an initial impetus for ricing house prices, which leads to wealth effects due to higher house prices such as higher consumption patterns. Despite these positive effects, it is widely agreed that international capital influx in the housing markets will have negative effects in the short or long term. Because this influx does not contribute to sustainable productivity growth, it contributes to a risk build-up potential. Paying back these debts will become more difficult as housing prices stagnate and the capital vanished in residential investments and domestic consumption (Punzi, 2013; Richter & Werner, 2016). The question whether housing market cycles can be attributed to global capital influxes remains without firm confirmation, as it can be seen as a kind of ‘’chicken-or-egg’’ problem. Some point out that capital flows may have initiated an increase of house prices and higher consumption due to wealth effects, while others argue that increasing domestic consumption of housing was needed in the first place to attract global capital (Laibstrom & Mollestrom, 2010; Richter & Werner, 2016; Broner et al, 2013). In Amsterdam the housing prices are increasing faster than in the rest of the Netherlands. The average price in Amsterdam rose from €261.700 in 2008 to €358.000 in 2016, an increase of 37%, while housing prices in the Netherlands as a whole rose only with 1,8% (CBS, 2017). Whether this increase in Amsterdam can be attributed to global capital is unclear. Besides the housing prices, rents are increasing as well. The average rent for a dwelling in Amsterdam in the private rental sector is now €1100 (Gemeente Amsterdam, 2016). These numbers for housing prices and rents show, that however the demand is high, and the municipality is trying to enlarge the supply, this is not sufficient to stabilize prices, leading to unaffordability. As this thesis is concerned with the private rental sector, the next part will elaborate on methods to control the rental market and maintain affordability.

3.2 Definition of concepts

In order to measure something, one should first know exactly what it is that is being measured and what are the parameters. This thesis is established around the main concept of affordable rental housing. To be able to conclude something on the way the private rental sector can provide more affordable housing, it should be established what exactly is considered affordable housing in this

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research. The other term that needs to be operationalized is the private rental sector. What are the actors within this sector, what is considered PRS and what is not.

What will be considered affordable housing

As discussed above, there are several methods to establish a quantifiable parameter for affordable housing. Although much criticized, the rent-to-income ratio is the most useful to establish a concrete number under which housing will be considered affordable in this research. One of the concerns regarding this method is that it is pure quantitative and does not include factors like the quality or space of a dwelling. Although this is a viable argument, it is not considered very important for this research. Firstly, this is because factors like quality and space are not of direct importance to answer the research question. Secondly, the case of Amsterdam is embedded in a different context than most of the literature encompasses. In the Dutch context, there are many regulations considering the minimum quality and space of dwellings, making the critique on the RIR less relevant. The other methods discussed in the literature review concern the important point of real affordability for households, but these are, however, more concerned with affordability on a household- to neighborhood scale to establish more knowledge on affordability in concern with poverty-levels. This research is more concerned with affordability on a city-wide scale and these methods are therefore less useful. Even though these methods are not directly used to establish what exactly is considered affordable in this thesis, they might be used in a later stadium of the research to assess different outcomes of measures to enlarge the provision of affordable housing by the PRS.

By using the rent-to-income ratio, the range of affordable housing in Amsterdam can be established. The exact percentages between which it can be considered affordable is not agreed on by many authors. Till (2005) states that 15-30% can be perceived as affordable, but adds that 25% is more conventional. Revington (2015) describes affordable housing in Canada and uses the limit of 30 %, this number is also used by government agencies in Canada. Kutty (2005) makes a relation to the mortgage-market, and states that mortgage lenders advice a maximum of 29% of a households monthly income to be spend on mortgage payments. In the Dutch context, the National Institute of Budget Information also works with an advised percentage between 25 and 30% (NIBUD, 2017). Therefore 30% shall be maintained as the maximum percentage for a rent to be affordable.

Establishing the maximum rent for affordable housing in Amsterdam

In order to establish a maximum monthly rent, the medium income of a medium household shall be determined, subsequently the maximum affordable rent can be identified. First, the macro quote shall be established, followed by the micro quote. In using and calculating the quote, this is done in this thesis without including costs like electricity and water-bills.

In Amsterdam, there were 442.693 households in 2015, with an average of 1,8 persons per household. In a rapport by the municipality of Amsterdam, it is stated that the average income per household was 31.400 euro a year in 2012. The average for the publication year (2015) is not stated, but the fact has been given that between 2012 and 2015, the average household income has risen with 2,2% per year. If the average of 31.400 is extrapolated with 2,2% per year to 2015, the average income per household in Amsterdam is 33.518 euro (OIS Amsterdam, 2015). A further extrapolation towards 2017 is possible but it is unclear whether the income-rise is constant from 2012 to 2017, therefore in order to be sure there will be worked with the number for 2015. When the rent-to-income ratio of maximum 30% is used now, this means that the maximum monthly affordable rent in Amsterdam is (33.518 / 12) * 0,3 = €837,95. Therefore, every monthly rent under €837,95 van be considered affordable when this method is used.

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To establish the micro quote, the maximum rent is calculated for different income groups, and then the average is generated. This should give a more realistic view on the amount that is actually affordable to spent on rent (Correspondence with dr. M. Haffner, 2017). In this case, the population of Amsterdam will be divided in income-quintiles. Consequently, the maximum affordable rent will be established for every quintile using the RIR method. Finally, these are averaged and give a new rent limit under which shall be considered affordable. In table 2, data from the CBS on the entire Dutch population is used as there exists no data on income quintiles for Amsterdam.

The income used is the averaged available income per household, this is the income after taxes and redistribution of welfare such as unemployment benefits (CBS, 2015).

If this method is used, the monthly rent that can be considered affordable is €975,04. The difficulty with this method, however, is that it clearly shows that an average does not say much in the case of affordability. If this average is established as the maximum, table 2 immediately shows that this maximum is too much for all but the highest two quintiles.

Establishing the most accurate maximum for affordable housing is an entire research on itself, and will not be pursued in this thesis. Yet in order to have a defined concept of what is considered affordable, the average of the outcomes from these two methods will be used as the maximum here. The average of the micro- and macro-quote as calculated above is €906,50.

The private rental sector

Within the rental sector, a few distinctions can be made. There is the public social housing, the small private landlords, and there is the private rental sector this research shall focus on. The latter are all the companies which business it is to develop rental housing and/or let property. The ways in which the sector expresses itself differ much from country to country. Countries that come closer to resemble a dualist market as described by Kemeny (1995) often have a PRS that fulfills an important role in the provision of affordable housing. In countries where the public sector serves as an ambulance service, this sector is limited in providing large amounts of housing and there is naturally a larger role for the PRS (Hulse & Pawson, 2010). An exception can be found in The Netherlands, which used to resemble much to a dualist market until recently, but has a relatively small PRS. Most other European countries have a system that comes closer to the unitary system but is often a mix of the

Income-quintiles Average household income per

month

Maximum rent (average income x 0,3) 1st quintile €2000 €600 2nd quintile €2667 €800 3rd quintile €3000 €900 4th quintile €3417 €1025,10 5th quintile €5167 €1550,10 Average €3250,20 €975,04

Table 2: Income quintiles and their maximum rent. Source: CBS (2015). Edited by

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two. Yet almost all European housing markets have a distinctively small PRS, with the exception of Germany and Austria. This is partly attributed to the large extent of regulations and rent control that is prevalent in most countries, and (Feddes & Dieleman, 1997).

In The Netherlands, there is a rigid dualist system that divides social housing from the free rental sector. There is a determined rent limit (liberalisatiegrens) that divides the rental market between regulated and not regulated. Everything below that limit, which is now €710,68, is subject to specific regulations that determine the rent that can be asked for a certain dwelling (Staatscourant, 2016). Before 2015, public housing agencies could have a combined housing stock of social housing and dwellings above this liberalization-limit, but now these have to be strictly separated in order to comply to European competition rules (Ronald, 2013; Woningwet, 2015). This strict division creates a situation in which there are four sorts of rental housing in The Netherlands (Figure 3). These are the regulated dwellings from the public housing agencies, the unregulated dwellings from public housing agencies, and then regulated and unregulated dwellings by private landlords and the private rental sector. As can be seen in figure 3 is the PRS relatively small, especially the part above the liberalization limit with only 3,5% of the total housing stock. The focus of this thesis will be on the green block in the figure: the deregulated private rental sector. The integral private rental sector is considered, yet the gap is between the liberalization-limit and the maximum of affordability as established on €906,50. Furthermore, the part of the private rental sector within the regulated sector is expected to quickly decrease to a very low level. This is due to the new dwelling-valuation system that allows for the worth of the dwelling based on its surrounding (WOZ-waarde) to be included in the calculation for the rent. In Amsterdam, this means that almost all rental dwellings that are now regulated can be offered above the liberalization limit.

Figure 3: The rental sector in The Netherlands in 2015. Percentages are derived from the total housing stock in 2015. Source: Author, based on data of Rijksoverheid: Staat van de woningmarkt 2016.

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4. How to research the constraints and possibilities for the private

rental sector

This section will clarify the methodological choices and considerations that form the important backbone of this research.

Case study approach

As this research is concerned with the conditions that could increase the amount of affordable housing provided by the private rental sector in the case of Amsterdam, it can be considered a case study. It entails the detailed and intensive analysis of a single case, of Amsterdam in this case (Bryman, 2012). In order to research the case, literature from other cases can be helpful, yet the actual empirical data will all be about this one case. By using a case-study it is possible to find a qualitative and detailed answer to the problems faced in relation to affordable rental housing. This problem is not limited to Amsterdam, all over the Netherlands the demand for rental housing in the lower and middle-segment is growing, and municipalities can not keep up with this demand (Vlak et al, 2017; Stec groep, 2017; Groen, 2013). Yet a research on a national scale would encompass to many different contexts, for every city and region has its own problems in the housing market that might possibly need other remedies. Also, the housing market in Amsterdam is showing characteristics that resemble more with other world cities than with other Dutch cities (Jonkman, 2013; van Gent, 2013). Therefore, also the need to find an answer to this research question is most eminent in the case of Amsterdam, as the city is facing with real unaffordability that is possibly pushing people out and creating more segregation.

A case study knows some strong and some weaker points. The main advantage of using a case study lies in the quality and the internal validity of the research. It allows the researcher to give an in-depth analysis of the case and the elements that form the variables in relation to the subject. On the other hand is the external validity often low in a case study. This happens because a case is seldom representative for an entire phenomenon. Every case knows its own context and might show different causal relations that are not representative. An exception could be the exemplary case, which Amsterdam is obviously not in this subject. Another positive feature of the case study is its reliability. Because the researcher can focus on one case, the chances are higher that all influencing variables can be identified. This creates some outcomes that come very close to reality and therefore knows a high reliability and ecological validity (Bryman, 2012).

Research type

This thesis will be an exploratory research. This sort of research is known to be useful when there are already theories on the subject, but the exact settings or conditions that are needed for a phenomenon to occur is not yet clear (Saunders et al, 2009). This is the case in this research, where there is much written on the private rental sector and its relation with other sectors or housing markets, but the exact conditions in Amsterdam are unclear. Therefore, an exploratory study is appropriate to establish more knowledge on the conditions that are needed to create more affordable housing in the PRS, because it tries to find the variables that are influencing a process (Saunders et al, 2009; Bryman, 2012).

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Data collection methods

In order to answer the research question, data needs to be gathered in different forms. For this research, the data is collected mostly through primary sources, and to a lesser degree of tertiary sources. Primary sources are data that the researcher has collected, in this case that will be interviews with some of the main actors in the Amsterdam rental market. In addition, an informative evening with some key actors in the private rental housing provision will be attended to. This event provided the researcher with the view on the subject by some key actors such as housing associations, private rental sector companies and the municipality (Seminar Pakhuis de Zwijger: 21-2-2017) The tertiary sources are policy documents regarding regulations in the rental markets, municipality and other governments policies, and policy advises by institutions such as the Planbureau voor de Leefomgeving and the Sociaaleconomische Raad. These are tertiary sources because the researcher has not collected the data himself and the data is already analyzed. The primary and tertiary, together with the literature on the subject, should give enough information to answer the main question.

Interviews

In order to gather enough data from all the different actors it is important to interview enough stakeholders from all parties that are influenced by, or could influence the conditions needed for the private rental sector to supply more affordable housing. Those include actors from the private rental sector, the municipality, social housing providers and experts. In total, 9 interviews have been conducted with 3 actors from the private rental sector, one representative of the umbrella-organization for all social housing agencies in Amsterdam, 3 actors from different divisions in the municipality and two experts. Names have been kept anonymous, as described in the section on sensitive information, but the respondents’ roles are described in appendix 1.

This is a list of subjects to interview:

Wonam This is a company that develops and let affordable housing in the Amsterdam area. This company is thus doing what few companies do already. How are they creating affordable housing whereas others say it is not possible with the land prices in Amsterdam.

Sustay This is the same sort of company and provides rental housing with rents between 650 and 900 euros. Partly they are within the limit as determined in the definition of affordability. This company might make it more clear under what conditions it is possible to supply properties with lower rents and when this is not possible.

Cityside apartments This is a private rental company that provides young people with an affordable first rental house. The disadvantage of this company is that they are not active in Amsterdam, and are thus less representative and possibly face different difficulties. Nevertheless might it be possible to distillate some important conditions that make it possible in their experience to provide affordable housing.

Gemeente Amsterdam The municipality of Amsterdam is possibly one of the most important actors that determine the required conditions. It would provide viable information for the research if some representatives could provide information related to the policies for the rental sector, the land price policies and the role the municipality can play regarding the provision of more affordable housing.

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Also, different perspectives from within the municipality can provide a broader view on the problems and ambitions to generate more rental housing provision in Amsterdam. Someone from the department of housing might have a different perspective or interests in regard to someone from the department of ground policies or a politician.

Amsterdamse Federatie van Woningcorporaties – This organization functions as the interest group organization for all the social housing associations. Besides providing knowledge about the sector, it is also concerned with affordable housing in general and matters outside the sector.

Experts Academic experts on the field of affordability and the Dutch rental markets might give further insight in the processes that create the market as it is right now. Furthermore, they might have insights on changes that could enhance the possibilities for the private rental sector to provide more affordable housing.

Approach to sensitive information

In the progress of the research it became clear that the topic of private rental housing provision in Amsterdam is a politically sensitive one. Interviewees in different roles and from different actors expressed the feeling that they could not speak freely as a professional person due to their role in the process. In some situations, it was clear that their professional role was incompatible with sharing all knowledge about their view on the situation regarding the PRS. Also, it became clear that the role of the PRS and the way it functions is in the end a political problem, and speaking freely about the subject can therefore be considered politically sensitive for some interviewees. Therefore in this research the names and the exact function of interviewees within an organization will be kept anonymous. This allows interviewees to speak freely about the subject and enables this research to give a complete overview of different views on the provision of rental housing in the PRS without being restrained (Bryman, 2012).

Interview format

The format of semi-structured interviews is chosen as it allows for conversation and follow-up questions as well as giving enough structure to be coherent and address al important topics. One should think in advance about the data that is actually needed to answer the main- and sub question. By doing this a structure can be developed, and while leaving the exact course of the interview open it creates clarity on topics that need still to be addressed (Bryman, 2012).

The interviewees need to be representative for the different actors involved. Because the interviews will be in-depth and they all get to elaborate on the same topics, the problem of the PRS and the possibilities to supply more affordable housing will come to light. Several PRS companies shall be requested for an interview to create an overview of all the factors that influence the capabilities of the sector in its provision of certain sorts of housing.

As interviews are the primary and main source for generating data in answering the research question, the required data from the interviews is quite extensive. Data is needed on the following topics, wherein the first ones are more general and the latter more actor specific:

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o Determining the sort of housing, considerations on size, price, location. - Different roles in the process

o Who determines the land prices o How can the prices be kept low

o What regulations exist for different actors

o Different subsidies for different developing parties

o Views on different forms of stimulation such as demand or supply-side subsidies or regulations

- Actors

o Who should provide affordable housing

o Except social housing, what parties can or should play a role o Why is it hard for the PRS to supply affordable housing

o What would be needed to give the PRS more opportunities in providing affordable housing

- Actor-specific questions o Their projects

o Their influence and view on the affordability problem o What can they do to generate needed change

o Who should do what

Method of analysis

The qualitative data derived from interviews takes the form of a large corpus of unstructured textual material. All the interviews are transcribed in their exact form to ensure the completeness and accountability of the data. The large extent of the data derived from interviews poses one of the main difficulties in qualitative research, as it is hard find analytical paths in the richness of data. In order to remain centered around the key subject and not get carried away by all the possible wider significances of the data, a clear method of analysis must be established. In qualitative research the most common methods are coding, narrative analysis and thematic analysis (Bryman, 2012). The latter will be used in this research. This method is related to coding in the way that it divides different fragments in the texts into certain subjects, yet it remains more focused on a few themes and allows for convenient oversight in different stances on a theme. Moreover, thematic analysis provides a good framework for identifying the different themes. In this research, it is of importance to identify the different limitations and possibilities as experienced by different interviewees. Within this method, this will occur by providing a schematic overview of the different responses within the theme ‘limitations’ or ‘possibilities’. This will be the first step of analysis as the limitations and possibilities need first to be identified. Once these are established, a subsequent scheme will list all the established factors that influence the sectors capacity to provide affordable rental housing and the possible changes (Figure 4).

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In order to be effective in using the thematic analysis, Ritchie et al (2003) advise to only insert the

Figure 4: A partly filled-in thematic analysis of the limitations for the PRS to provide affordable rental housing. In the real analysis, all the data from interviews is used, as this is only an example it is not entirely filled.

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essentially recurring motifs from the text. These are the product of extensive reading and rereading of the transcripts. The themes, which are initially ordered in the first scheme, can then be displayed in terms of subthemes within the matrix and for each interview. In asserting material in the cells, four advises are incorporated. It is indicated with the page number from the transcript were the fragment comes from, the language of the interviewee is kept as far as possible, the amount of material inserted is tried to kept low, and abbreviations are used in cells in order for the cells not to become too full (Ritchie et al, 2003).

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