EFL Chairman Ben Pluijmers adresses (non) sense of market valuation Dutch social housing sector
In a recent article in the Dutch magazine Renda, EFL chairman Ben Pluijmers adressed the new valuation standard for Dutch social housing associations. In the Dutch article he explains that new governmental ruling obliges housing associations to use market value of their properties in their balance sheet. Not the real market value (for what amount a property can be sold), but a value calculation based on normative income stream and an exit yield. The effects of the new regulation are tremendous: the total equity value of the sector has risen from 52 billion euro until 155 billion euro in 2016. Without any additional real income in terms of cash flows. Some critics regard this move from the Dutch government as a way for future (higher) taxation. Ben mentions that in most other European countries valuation on market base not exists in the social housing sector. What insight does it provide, if sale of social property is in many countries not possible ? What sense does it make in the Netherlands after the recent change in legislation in which the Dutch social housing associations must focus again on their ‘core business ‘ ? That is renting out social homes to vulnerable income groups ; no sale of social homes. The only sensible way of management is steering on cash flows; that’s the daily business of the social housing sector. It seems that the new valuation system has no particular advantage, nor for the sector, neither for the tenants. Only the government might be interested.