User Costs and Housing Expenses. Towards a more Comprehensive Approach to Affordability

Figures & data

Table 1. Tenure distribution (%) in Flanders (2005) and the Netherlands (2006)

Tenure	Flanders		The Netherlands
Rented sector total	24.1		44.2
Social rented sector		5.6		35.2
Private rented sector		18.5		9.0
Owner-occupied sector total	74.4		55.8
With a mortgage		33.6		48.5
Without a mortgage		40.9		7.3
Free housing	1.5
Total households	100		100
Sources: Flemish Housing Survey (2005), WoON (2006), TU Delft/OTB calculations.

Table 2. Components of residual income in relation to the income of the tenant and the owner-occupier

Tenant	Owner-occupier
Gross rent*	Gross housing expenses**
– Housing allowances	– Fiscal effect income tax
= Net rent	= Net housing expenses
Disposable income	Disposable income
– Net rent	– Net housing expenses
= Residual income	= Residual income
Notes: *Gross rent includes any costs that the landlord will include in the rent calculation, also for maintenance, property tax, etc. Gross rents could be set lower than market rents either by subsidy, by rent regulation or by taking a loss (social landlord).
**Gross housing expenses include the amounts for financing, property tax and other property owner expenses, such as home insurance fees, ground lease charges, property tax and owner's share of maintenance.

Table 3. Components of residual income according to tenure for recent movers, average amounts in euro per month, Flanders/the Netherlands, 2005/2006

	Gross rent/ gross housing expenses	Housing allowance/ fiscal effect	Net rent/ net housing expenses	Disposable income	Residual income
Flanders
Rented sector	423	− 2	421	1814	1393
Private rented sector	453	− 1	452	1884	1432
Social rented sector	258	− 2	256	1433	1177
Owner-occupied sector*	830	− 84	746	3349	2603
The Netherlands
Rented sector	421	− 47	374	1631	1257
Private rented sector	501	− 19	482	1927	1445
Social rented sector	394	− 56	338	1533	1195
Owner-occupied sector*	1074	− 308	766	3127	2361
Notes: *owner-occupiers with a mortgage.
Sources: Flemish Housing Survey (2005), WoON (2006), TU Delft/OTB calculations.

Table 4. Components of residual income according to tenure and tertiles of equivalent income for recent movers, average amounts in Euro per month, Flanders, 2005

Gross rent/gross housing expenses		Housing allowance/ fiscal effect	Net rent/net housing expenses	Disposable income	Residual income
Rented sector, equivalent disposable income tertiles
1	358	− 4	354	1125	771
2	418	− 1	417	1645	1237
3	488	0	488	2617	2129
Owner-occupied sector with a mortgage, equivalent disposable income tertiles
1	699	− 60	639	2325	1686
2	769	− 92	677	3111	2434
3	1011	− 98	913	4540	3627
Source: Flemish Housing Survey (2005).

Table 5. Components of residual income according to tenure and tertiles of equivalent income for recent movers, average amounts in Euro per month, the Netherlands, 2006

Gross rent/gross housing expenses		Housing allowance^*/ fiscal effect	Net rent/net housing expenses	Disposable income	Residual income
Rented sector, equivalent disposable income tertiles
1	370	− 91	279	974	695
2	407	− 44	362	1518	1156
3	485	− 5	480	2401	1921
Owner-occupied sector with a mortgage, equivalent disposable income tertiles
1	901	− 191	710	2129	1419
2	1024	− 282	742	2862	2120
3	1297	− 450	847	4390	3543
Notes: *Housing allowance received is based on income in reference period. That income may not be equal to the income measured in the survey.
Source: WoON (2006), TU Delft/OTB calculations.

Table 6. User costs of housing according to tenure status and income, for households that moved during 10 recent years, average amounts in Euro per year, Flanders/the Netherlands, 2005/2006

		Quintiles of equivalent disposable income
	Total	1	2	3	4	5
Flanders
Owner-occupation, incl. expected value change	− 7637	− 8863	− 9819	− 9036	− 9469	− 1103
Owner-occupation, excl. expected value change	12066	9914	11025	12630	11597	15190
Rented sector	4936	3705	4478	5164	5133	6064
Private rented sector	5328	4438	5217	5184	5475	6187
Social rented sector	2998	–	–	–	–	–
The Netherlands
Owner-occupation, incl. expected value change	− 4128	− 3093	− 3292	− 3431	− 3504	− 5660
Owner-occupation, excl. expected value change	12290	13315	10962	10968	11373	14293
Rented sector	4437	3387	4325	4889	5504	7107
Private rented sector	5653	4148	4843	5360	6382	8602
Social rented sector	4092	3251	4216	4735	5094	5519
Sources: Flemish Housing Survey (2005), Stadim (2006), WoON (2006), TU Delft/OTB calculations.

Figure 1 Composition of annual user costs (Euro) of Flemish owner-occupiers according to quintile of equivalent income, 2005. Source: Flemish Housing Survey (2005).

Figure 2 Composition of annual user costs (Euro) of Dutch owner-occupiers according to quintile of equivalent income, 2006. Source: WoON (2006), TU Delft/OTB calculations.

Table A1. Datasets and variables

Variable	Flanders 2005	Netherlands 2006
Interest on mortgage loan	Calculated with data from Woonsurvey (2005)	Available in WoON (2006)
Fiscal effect mortgage loan	Calculated with data from Woonsurvey (2005)	Available in WoON (2006)
Owner's equity	Calculated as ‘value of the dwelling minus outstanding mortgage loan’	By owner-occupier estimated value of dwelling minus outstanding loan
Transactions tax on purchase of existing dwelling: assumed to be financed with owner's equity	Transfer tax: 12.5% or 6% (small dwelling) of purchase price before 2002; 10% or 5% (small dwelling) since 2002	Transfer tax: 6% of purchase price
Purchase price dwelling	Available in Woonsurvey (2005)	Available in WoON (2006)
Outstanding mortgage loan	Calculated with data from Woonsurvey (2005)	Available in WoON (2006)
Interest rate on owner's equity	3.40% (2005; effective return 10-year government bond) (National Bank of Belgium, 2008)	3.37% (2005; effective return 10-year government bond) (OECD, Main Economic Indicators, 2007)
Fiscal effect owner's equity	15% of the interest on 10-year government bond	Estimated as 30% tax rate on private net wealth
Expected appreciation	Average development last five years (2001 to 2005), according to dwelling type (apartment, small/average dwelling, large dwelling) and province (Source Stadim). Average is 8.2%.	Average development last five years (December 2000 to December 2005) based on repeat sales index (Kadaster) differentiated according to dwelling type and province. For single-family dwellings: 3.9% to almost 10%; and for multi-family dwellings: 4.3% to almost 12%.
Costs of operation:
Depreciation	0.85% of house value (Conijn, 1995)	0.85% of house value (Conijn, 1995)
Building insurance	No data available	Available in WoON (2006)
Ground lease	No data available	Available in WoON (2006)
Owner's share of maintenance costs	Estimated with data from PSBH (2001), according to number of rooms and indexed. It is estimated as: (average maintenance costs owners minus average maintenance costs tenants) / average maintenance costs owners, Ratio = 0.58	The Flemish ratio of 0.58 is used to determine the owner's share in the total average amount of maintenance costs for owner-occupiers
Owner's share of property tax	Calculated with data from Woonsurvey (2005)	Available in WoON (2006)

Stadim (2006) Average House Prices 1990–2005 (Study Department of the Flemish Government). Available at http://aps.vlaanderen.be

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Conijn , J. B. S. 1995 . Enkele financieel-economische grondslagen van de volkshuisvesting , Delft : Delftse Universitaire Pers .

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