If everything eventually blows out of the US, the same applies to the consequences of rent regulation. Previous experience with rent control in the United States has shown that, on balance, it actually leads to a reduction in the number of (affordable) rental properties.
PropertyNL spoke to Taco Ulrich, a partner at Westplan Investors, which has been developing rental properties in the US for 30 years. According to Ulricht, there is a lot of scientific research in the US on the influence of rent measures on tenants and landlords, such as the one Minister Hugo de Jonge wants to introduce to guarantee the affordability of rental housing. However, it is not about initial rent and maximum rent increase, but about “rent control” and “rent stabilization”.
Usually on the political agenda
For example, in 2018, the National Multifamily Housing Council (NHMC), or Dutch IVBN, published a summary of 30 empirical studies conducted since 1972 on rent control and rent stabilization in various US cities on the East and West coasts. In the United States, rent affordability is a topic that regularly appears on the political agenda and has led to action in many states and cities.
Decrease in rent distribution
Spoiler: the measures have only a limited effect on the intended effect – and great affordability means few restrictions. While some people on low incomes benefit from rent protection, the same applies to people on high incomes. Also, ‘rent control’ reduces mobility of people. They stay in a particular house for a long time and sometimes it doesn’t fit, for example after family expansion or because of poverty. Security of tenancy appears to reduce the supply of rents, even in the protected sector, and unsecured rents are actually higher.
Land cost component
According to Ulrich, while the US situation cannot be translated one-to-one to the Netherlands, there are lessons for Minister de Jonge and his successors to learn from it to control the Dutch rental market. ‘When it costs more to make something, you also get the income bubble back. In fact, it threatens to become structurally more pressing in the Netherlands than in the US, as the land price component has become more important in the Netherlands, while it is much less important in the US. It seems logical to me that when creating policy that touches the heart of housing development, you also look at experiences elsewhere.
Read more about Westplan’s experiences with rental activities and vision in the US in our special issue of Real Estate CVs. It will release on October 27.
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