The Dutch housing market is strongly subsidized: owner-occupiers may subtract mortgage interest payments fully from income tax and may benefit from tax exempt price appreciation, in the rental sector rents are heavily regulated and an income-related subsidy is available to low-income households. The total amount of annual subsidization is roughly 29 billion euro annually in 2006, equally distributed over both sectors. In this paper we study how social welfare is affected by the elaborate subsidization schemes. We find that the welfare costs of subsidization amounts to around 2 billion euro annually.