Netherlands banned buying houses to rent, but the experiment did not lower prices
You've surely heard that if 'big investors' are removed from the market, housing prices will magically fall and everyone will be able to buy a home. Well, in the Netherlands, they decided to test this idea with a law called Opkoopbescherming (purchase protection), which prohibited investors from buying medium and low-priced homes to rent out. Today, thanks to an economic study by the universities of Amsterdam and Rotterdam, we know what happened: the experiment was costly for renters. The study was led by Marc Francke, Lianne Hans, Matthijs Korevaar, and Sjoerd van Bekkum, titled 'Buying to live vs. buying to rent: The impact of real estate investors on housing costs and neighborhoods,' where they concluded that after the prohibition of buying homes for rental purposes, purchases by investors decreased.
TL;DR
- A Dutch law, *Opkoopbescherming*, banned investors from buying medium and low-priced homes for rental purposes.
- The law did not significantly impact housing sale prices, as private buyers quickly replaced investors.
- Rental supply decreased, leading to a 4% increase in rental prices in regulated areas compared to unregulated ones.
- Homeownership increased for middle-income households, but lower-income and younger renters were displaced.
- The measure resulted in forced gentrification, with higher-income households moving into formerly rented properties.
- The study suggests that regulating home purchases does not address the fundamental issue of housing scarcity.