Lawyers demand VAT reduction on social housing in the private market
The construction of social housing by the private sector is being further strengthened in Brussels, say two law teachers Nicolas Bernard (Université Saint-Louis) and Eduardo Traversa (UCL). They argue for a further VAT reduction to 6 percent for new social housing. Or for a Brussels subsidy that offsets the VAT. “That is still cheaper for the government than building the houses themselves”
Both studies have a paper ready, which will appear in the journal on Monday Brussels studies. VAT is a federal matter, but according to the lawyers, the Brussels region can further steer social housing itself through regulations and subsidies.
The current federal VAT rates still do not stimulate the private sector enough to build social housing, they say. VAT on new construction will fall from 21 to 12 percent if that home is entrusted to a social rental agency (SVK) for at least 15 years. Such an office then rents out the house to the right target group at a social rate. That is the case all over the country.
Same VAT
Only the SVKs in Brussels can no longer follow the applications: the number of homes under their management has increased by 30 percent in a short time, say the two lawyers. And other players can’t help. Private individuals who want to rent out their home through a different route at a social rate do not enjoy the same VAT advantage. Meanwhile, the public real estate sector can build social housing at a much more advantageous VAT rate of 6 percent.
“The differentiated VAT rate is mainly for private initiatives, which we really need in Brussels to boost the production of social housing,” the lawyers write.
Grants
The private sector accounts for 90 percent of all new construction in Brussels. The government itself only pays 10 percent. In the meantime, a tenth of all Brussels residents is still waiting for social housing. They are often on the waiting list for more than ten years.
The lawyers propose that Brussels should de facto adjust the VAT rate to 6 percent for private players who build social housing, but via a regional subsidy. That subsidy can make up for the VAT difference without the need to change federal rules. “Such a subsidy comes with a price tag, of course, but the expenditure is significantly lower than the high amounts for the social housing managed by a public company.”
In order to receive such a subsidy, the private players will have to meet important social conditions. It is also an option, they write, to temporarily call in subsidies in a very targeted manner for new construction in municipalities with few social housing. Once all Brussels municipalities count for at least 15 percent of social housing (as the coalition agreement presupposes, ed.), the measures could stop. For the time being, the lawyers refer to a ‘thinking exercise’ in their paper.
Purchase strategy
Brussels stands for housing After secretary Ben Hamou (PS) first wants to propose in detail to respond. Ben Hamou has relaxed the purchasing strategy for the regional housing company (BGHM) this year. In this way, the float can purchase private homes for social use. The relaxation was approved in December in the Brussels parliament. It needs 650 additional social housing units by 2024.
N-VA
In Flanders, too, discussions are underway to prevent the private sector from being more involved in social housing. Minister Matthias Diependaele (N-VA) wants to grant half a billion in cheap loans to private players to help build homes at capped rents. That proposal immediately faced a lot of headwind, also within the Flemish majority.