Dutch Cabinet to Amend Housing Bill to Attract Support

The Dutch government coalition today probably will amend a housing bill that lacks a majority in the Senate and is part of an austerity package aimed at complying with European Union budget deficit restrictions.

The move marks the second time that major legislation proposed by Prime Minister Mark Rutte’s Liberal Party and the Labor Party, its coalition partner, didn’t get parliamentary approval.

The government may need to adjust plans to restrict tax deductions for mortgages of 30 years or less and have rental rates for people with an income of more than 43,000 euros ($58,000) rise as much as 5 percent. The government also wants to impose 2 billion euros in levies on housing corporations. The law needs to be passed before March 1 if the higher rents are to become effective July 1.

“I’m confident we will succeed,” Labor Party leader Diederik Samsom told reporters upon entering negotiations with the opposition parties. “We need to get this right.”

Rutte and the Labor Party need the support of three opposition parties to reach an agreement after talks with the Christian Democratic Party to get Senate approval failed Feb. 11. The Christian Union, the D66 Democrats and the SGP are in talks with Labor and Rutte’s Liberal Party, known as the VVD.

“Two billion euros is a lot of money and we need to look very carefully on the impact such an amount has on the budget,” Halbe Zijlstra, leader of the VVD in parliament, said in a televised interview.

First Test

The housing plan was the first major test for Rutte in the Senate, where laws are being evaluated and checked before they take effect. In October, the government had to adjust a health-care bill after widespread opposition in the lower house from Rutte’s own party.

House prices are predicted to drop this year as the Dutch economy may contract 0.5 percent, according to Dec. 19 forecasts by the government’s planning agency, CPB. Prices have declined by an average 16 percent since the start of the credit crisis, real estate trade group NVM said last month.

“The proposed policy of Rutte II with the hope and perspective that Housing Minister Stef Blok can close the ongoing discussion of the past few decades on housing market reforms, offer chances of a stable housing market,” Maarten van der Moolen, economist at Utrecht-based Rabobank, said in the bank’s quarterly housing report today.

Prices will probably remain under pressure this year amid rising unemployment and declining purchasing power, Rabo said.

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