Zuilen: Regulating market-initiated subdivisions

The Utrecht neighbourhood of Zuilen became a popular location for investors to buy family houses and subdivide them into rental apartments or rooms. On the supply-side, rapidly rising housing prices, globally low-interest rates, a lack of taxation on rental income in the Netherlands, and growing retirement insecurity created an economic incentive. Besides, there was an increasing demand for rental rooms and apartments due to general demographic changes.  

In the Netherlands, owners need to request a permit before they are allowed to subdivide. The decision to accept or reject the permit request in violation of the zoning plan is a discretionary power of the municipality. Because of the shortage of student accommodation and apartments for young professionals, the municipality of Utrecht used to grant all permit requests for subdivisions. 

However, these subdivisions happened so often that the densification increased pressure on the existing infrastructure. In response, residents decided to protest the high number of subdivisions. Subsequently, the municipality decided to stipulate the conditions under which an exception can be granted. For each permit request, the interest in densification is now weighed against the living conditions in neighbourhoods. 

The ability to make case-by-case decisions gives the municipality more steering capacity and provides flexibility in the face of many conflicting interests. However, this approach to planning also poses some challenges. As the city implemented the new conditions for obtaining a permit, investors moved to other (unregulated) opportunities, such as short-term rentals, or decided to subdivide illegally. The case shows how difficult it can be to regulate pressures on dense living environments, especially when these pressures fall outside the scope of planning.