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October 2017
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Bankruptcy of Dutch landlords caused by Dutch government

house-for-rentPaying for your studies by selling DUO beer? Two students from Groningen, the Netherlands, created their own beer with named DUO (the government departement that pays your studiefinanciering every month). Following Tekstra and Huging, the founders of DUO beer, they are in need of money to pay off their debts from student life. Even though they received student grants (studiefinanciering) during their studies they had to loan money from the government and they now have to pay off their debts to the government in two years.

As you can see more and more solutions are being found today to pay study debt to the Dutch government. Even today while students receive student grants from the Dutch government a lot of students have to loan in order to live on their own in student cities and to pay for their studies. From 2015 onwards new students will have to loan all money needed for their studies and living during their studies from the government. Students will not receive the, €272,00 euro per month, grant, from the Dutch government anymore, which means that this €272,00 has to come from somewhere else. If students do not have parents or jobs that bring enough money to pay their studies and other necessary needs during studying they will have to loan from the government to survive. This will result in paying your debt until your 65st following research of the CPB. Following the CBS around 700.000 students will be affected by not receiving a grant from the government and having to loan money for their studies instead.

Because students will have less money per month, living on their own will be relatively more expensive than it is today. A better way for students to have less debt in the future is to stay living at their parents’ place. The consequence of this is that landlords will have a decrease in their revenue and therefore their income. This may even cause landlords to go bankrupt which is caused by their own government. As Pieter (49), landlord in Rotterdam, states: “At this moment I do not notice change yet, but I am scared for the future. I think my income will drop because there will be less student participants in the room market. I believe this is caused not only by more expensive studies but especially because students will have to loan money from the government to live on their own. Living at their parents’ place will therefore be less expensive.” Pieter is not the only landlord that is anxious about the loan system of the Dutch government. Henry (52), landlord in Utrecht, agrees to the view of Pieter: “because studying itself is already more expensive, money has to be deducted from another expense post, I am afraid this will be from housing for students on their own.” Finally, also Dirk (53), landlord in Rotterdam, agrees with Pieter and Henry: “when students want to live on their own, they will need to get the money somewhere. Loaning more money from the government when living at your parents’ place is also possible seems redundant.”

Studying in student cities far from students’ parents place will become a privilege for the rich. This because studying is already more expensive than we used to know following Jade (20), student in Rotterdam at the Erasmus University. Jade studies economics so shes also understands the financial benefits for the government, which following her not a lot of other students think of. Though Jade understands the positive aspects for the Dutch government, she does think that the negative sides of the new loan system do not make up for the reduced costs of the government. Except for less students because of higher costs, it will definitely cause students to study closer to their parent’s home. If this is not possible students will rather travel for more than 2 hours a day because this will stay free. The consequence for students will definitely have an impact on landlords following Jade: “less students will go live on their own and will therefore not experience student life as an inhabitant of the city of their university.” This will cause less demand for rooms in student cities which will cause less income for landlords.

It is actually a very easy concept, less money in students pockets causes less students living on their own, resulting in less demand which causes lower room prices and therefore lower income for landlords. Lisa (43), landlord in Nijmegen, is afraid for a lower monthly income because of a deduction in the amount of the rent she can ask for rooms in Nijmegen. “I will have to lower my monthly rent, which might even cause I am not able to pay for my own costs anymore.” Martin (63), landlord in Rotterdam, is afraid that he has to rebuild his student rooms in apartments for starters, “this will give a lot of costs but I am not able to ask the same amount of money for a whole apartment as for two or even more rooms.” For Martin this will also cause a decrease in his monthly income which could finally cause him to go bankrupt.

The new loan system will cause that new students have to loan for their studies. Students will need alternative ways to pay off their debts in the future, another way to make sure they do not have to make their own beer is to reduce the amount a student has to loan from the government. Less loan means less debt, a way to cause less loan from the government is to stay living at your parents place. Therefore less rooms will be occupied and the monthly income of landlords will reduce. In the end landlords will go bankrupt because they will be dependent on a too small amount of rich students.

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