In this study, the effects of the use of a different value concept (market value in rented state instead of business value) on the investment capacity of housing associations are investigated. The underlying reason for this research topic is related to the obligation of the Dutch government (provided in the revised Housing Act) to value property at market value in rented state since 2015.
In order to examine the effects of both value concepts on the investment capacity, several case studies are executed. It concerns housing associations of two different types, which are respectively located in rural and urban areas. The differences in the investment effects between the two value concepts and the different types of housing associations have been investigated by means of a defined average investment object.
The results imply that in the new valuation context it is getting harder to have a profitable business case. The empirical research further shows that in case of a valuation at market value in rented state, in contrast to a valuation at business value, the investment result is substantially lower for housing associations in rural areas (compared to housing associations in urban areas). Finally, it appears that investment decisions at market value in rented state will be based on more objective grounds than investment decisions at business value.