Officials in Amsterdam have agreed to relax tough rules for new housing projects in return for a commitment from developers that they will build 10,000 new mid-market homes in the capital in the next five years.

Alderman Laurens Ivens has agreed that homes with a rent of €740 to €1,030 can go up slightly faster than he had wanted and to reduce the price of building land if necessary.

In addition, the strict rule that 40% of new homes in a project be social housing, 40% mid-market and just 20% for sale or expensive rentals can be relaxed for smaller projects, the alderman has agreed.

Property developers had been pulling out of the capital because of the council’s regulations, saying that it would not be economically viable to build residential housing.

The two sides have now agreed that the rent for the new homes can go up by inflation plus 1% for 20 years. After 20 years new tenants will pay the market rate.

‘We are doing our utmost to contribute [to solving the housing shortage] via new builds and existing buildings,’ Frank van Blokland, director of institutional investor lobby group IVBN told the Financieele Dagblad.

The new homes will target middle income households with an income of roughly €40,000 to €60,000 a year and may be prioritised for certain professions such as teachers and nurses.

The deal with the developers will be signed later on Monday.