How far can a municipality go with housing requirements?

How far may a municipality go in imposing its own requirements on a development project? A recent ruling by the Administrative Jurisdiction Division of the Council of State (hereinafter: the Division) shows that municipalities have considerable discretion. However, that discretion has clear limits: requirements must be properly substantiated, and planning rules must be drafted clearly and carefully.

In this case, Stichting Zorgwonen Bronbeek (hereinafter: Zorgwonen Bronbeek) intended to develop residential units at a site in Arnhem. The municipality of Arnhem owned the land and had granted it under a long lease (erfpacht), subject to a use restriction limiting it to a retirement home. Since 2018, Zorgwonen Bronbeek has been the leaseholder. After the original application had been rejected, the municipal council adopted a zoning plan for 54 dwellings, together with an accompanying land exploitation plan.

The municipal council attached several conditions to the new plan. For example, 40% of the dwellings had to be designated as social rental housing. The council also imposed minimum floor area requirements for the dwellings and introduced rules regarding room rentals and special forms of housing, such as assisted living. Zorgwonen Bronbeek argued that these requirements unnecessarily restricted its development options and that the council had failed to sufficiently justify its choices.

The Division first ruled that, following the refusal of the zoning plan sought by Zorgwonen Bronbeek, the municipal council still had the authority to adopt a zoning plan with different content. The principle that a municipal council may regulate room rentals was also upheld. However, the specific planning rule in question was not drafted with sufficient care and therefore could not stand.

Similar problems arose with various other planning rules. While the minimum dwelling size requirements were permissible in principle, the municipal council had failed to explain adequately why comparable developments elsewhere in the same district could proceed without such requirements. Furthermore, the rule concerning the percentage of social rental housing could be interpreted in such a way that a single non-compliant dwelling would result in a general prohibition on use. This was considered contrary to the principle of legal certainty.

The exclusion of special housing forms also could not be upheld. The definition used was too vague to determine when ordinary residential use combined with partial home care would apply and when a prohibited care-related housing form would exist. In addition, with respect to the rules on room rentals, the municipal council had referred to the wrong article, unintentionally prohibiting the subdivision of a dwelling into up to three rooms. For these reasons, the Division annulled the entire zoning plan and the related land exploitation plan.

40% Social Rental Housing Was Permissible in This Case

A notable aspect of the ruling is that the requirement for 40% social rental housing was upheld. In principle, such a requirement conflicts with the EU Services Directive, as it restricts a landlord's freedom to rent out dwellings on the open market. A municipality therefore cannot impose such a requirement without further justification.

In this case, however, the municipal council was able to justify the requirement. It supported the measure with specific data showing that the proportion of social rental housing in the district was exceptionally low. In addition, the requirement was consistent with municipal policy, which prescribes a higher percentage than the general minimum in districts with a particularly low share of social rental housing.

The ruling therefore makes clear that a municipal council may exceed its own policy minimums, provided that this is justified on an area-specific basis and supported by concrete evidence. In the absence of such specific substantiation, the requirement may still be struck down, as happened with the minimum dwelling size requirements in this case.

What Does This Mean in Practice?

For developers and leaseholders, the key takeaway is that the content of a municipal requirement is not the only factor that matters. The reasoning behind the requirement and the precise wording of the planning rules are equally important. Unclear definitions, incorrect cross-references, and rules that go beyond their intended scope may result in annulment on the grounds of legal uncertainty or insufficient justification.