The Netherlands’ Rent Control Disaster
Kamala Harris has proposed a federal rent control scheme to bring down America’s high housing costs. The Netherlands is providing a good example of how that policy might work out in practice.
In July, the Dutch government expanded nationwide rent controls—which had already covered about 80 percent of rental units—to almost all remaining rental properties. Fully 96 percent of Dutch rental housing is now subject to rent caps.
A report from Bloomberg published last week details the results: Owners of rental properties are selling their buildings and getting out of the rental housing market.
The tenants of those units are being forced to try and find one of the few remaining market-rate units or purchase a home in the Netherlands’ hot housing market. In either case, home hunters face spiking prices and limited availability.
These results are what one would expect from rent control. The economic literature is unambiguous that when rent control effectively holds rents below market levels, the result is a shortage of available rental housing.
More honest boosters of rent control will argue that while the policy limits housing supply, it increases stability for tenants. Protected from sudden, unaffordable rent increases, renters are able to stay in their homes for longer.
But in the Netherlands, at least, rent control is having a pro-displacement effect.
Article from Reason.com
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