How to redesign a rent rebate system? Experience in the Netherlands

Abstract

In 2006, responsibility for implementing the Dutch housing allowance system was transferred from the Ministry of Housing to the Tax Authority. It has since been renamed, and is now known as the ‘rent rebate system’. A number of dilemmas have become evident since the 2006 changes. Attention has shifted to how to implement the system effectively: how to limit the overconsumption of housing services, how to avoid moral hazard, how to reduce outright fraud, how to reduce the poverty trap, and how to prevent the escalation of public spending. These new dilemmas have led to the central research question in this article: how to redesign a system of rent rebates? The discussion of these dilemmas points to further changes. Proposals for a redesign of the rent rebate system in the Netherlands are presented. These proposals could also be relevant for other countries.