The Dutch Household Mortgage System: Unveiling Its Connection to Neoliberalism

DIX

Why should I opt for buying a house?

“I want to buy my own house.” After renting for over 5 years in the Netherlands, Ashely (pseudonym) made her decision to purchase a self-owned property. She arrived in the Netherlands in 2017 to pursue her education at Wageningen University & Research, followed by works in Rotterdam and Amsterdam. Owning a house in the Netherlands was a prospective objective but not an immediate priority for her. However, after a breakup with her boyfriend early this year and guest-living in friends’ homes for a few months, she finally determined to buy a house instead of struggling in the frustrating Dutch rental market.

“Seeking a suitable apartment was overwhelming, and the transition cost me three months. While I leaned on my friends for help, I didn’t want to burden any one person too much, so I moved among different friends’ home;, all the while dealing with the challenge of managing my belongings and maintaining my municipal registration. You know what was hardest for me? I had to give up my dog. So I want to buy my own house, where I can regain my independence and welcome back my furry companion.”

Indeed, the Dutch government ensures the social rights of all legal residents, regardless of their nationality (Marshall, 1983; Soysal, 1994). As a foreign expat living in the Netherlands, Ashely can purchase a property with no restrictions as long as she meets the financial requirements. Owning a house is not only a long-term investment and security, but it is also a more straightforward option compared to renting. The majority of Dutch citizens use mortgage loans to buy their homes, with 61% of the population being homeowners with mortgages, surpassing other European countries.

Am I sufficient to borrow money from the bank? 

In terms of being a sufficient individual with borrowing power, multiple specific criteria may apply. People like Ashely who intend to purchase property have comprehensive knowledge of a mortgage loan. They seek advice from friends who have already purchased homes or share similar intentions; consult agencies and experts to stay updated on market trends; contact banks to grasp the nuances of interest rates; and get in touch with government agencies to understand policies related to taxes, management fees, and other regulations. They are more than experts. Ashely explained the most crucial factor for obtaining a mortgage loan is socioeconomic status. “You need to provide sufficient proof of your repayment ability, such as a permanent contract and gross annual income. And for us foreigners, it also requires the possession of a permanent residence permit.” Ashely further explained the alternative solution might apply to whom did not meet all the requirements—a statement signed by the employer that indicates the intention to extend the contract can be the replacement of a permanent contract while being a highly-skilled migrant (referring to kennismigrant working visa) be equivalent to having a permanent stay permit. Besides, Ashely additionally provided an insight into so-called stable socioeconomic status from another perspective.

“My ex-boyfriend and I planned to buy a house together before. Because being in a relationship can have advantages; you know, couples can potentially borrow more money from banks during the practical application process. It’s not just about the combined sum of the two individuals’ loans; they call this ‘1+1>2’^[1].”

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^[1] “1+1>2” means the synergy of two borrowers often results in a greater total borrowing capacity.

How does the Dutch mortgage relate to neoliberalism?

In short, work plays a dual role, serving as a means to financial stability and a foundation for a relatively stable social status, ultimately empowering one’s independence in society. Consequently, debt as a strategic solution to achieve a more secure socioeconomic standing, is closely intertwined with one’s employment. International expats may not attain full citizenship, but the social rights associated with their permanent residential status are closely tied to their obligation to engage in paid work, a duty shared by everyone in the country (Hall et al., 2015). This approach is consistent with the principles of neoliberalism embedded in Dutch mortgage policy for private property acquisition, emphasizing a rational and self-reliant approach to market participation. Paid employment is not merely a societal obligation; it is also framed as a key pathway to lifelong contentment, aligning with the normative values of neoliberalism (Ahmed, 2010). Furthermore, echoing Federici’s insights from 2014, debt in the context of a neoliberal capitalist system is not solely a means of wealth accumulation but is also employed by governments and financiers to erode social solidarity and undermine global efforts to establish social commons and alternatives to capitalism. Mortgage debt, as a form of individual debt, transforms the dynamics between capital and labor and among workers, making exploitation more self-managed and, in some cases, turning communities seeking mutual support into mechanisms of mutual dependence.  Individuals often commit to the repayment of their mortgage loans, relying on continuous employment to sustain their expectations of happiness. 

Moreover, the mortgage policy primarily centers around individual income, and while there is no clear evidence that family units have a more significant borrowing capacity than individuals, inequalities related to gender, race, and ethnicity in the workplace can influence an individual’s borrowing power, sparking debate. It is a common practice for people to seek partners to amplify their financial capabilities and share risks, particularly against the backdrop of neoliberalism. As Tronto (2017) aptly noted, the recognition that all humans are inherently vulnerable and fragile underpins the universal strategy of “Homines Curans” against the world.

I can depend on myself. What’s more?

It’s important to note that the Dutch government actively supports citizens in developing household financial management skills and encourages the adoption of insurance as a means to manage risks, or, to promote self-reliance by emphasizing the rationality of neoliberalism. the Nibud (National Institute for Family Finance Information) is an independent foundation in the Netherlands dedicated to providing families with guidance on financial matters related to private households. Additionally, the Dutch National Mortgage Guarantee (NHG) serves as insurance to assist individuals in addressing debt-related issues that may arise due to unfortunate circumstances including unemployment, disability, divorce, or the loss of a partner.

When asked about her concerns regarding the ability to meet mortgage repayments and whether she would consider NHG, Ashely expressed confidence in her ability to depend on herself and said she never thought about this question: “Compared to worrying about losing my repayment power, I am more worried about being so bond to a property.”

“I am not sure whether I want to commit myself to a house and I doubt if a house is my eternal aspiration.”

(Oct, 2023, Amsterdam)

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