The Telegraph recently made an elaborate item on new regulations in the Dutch housing market (2 October 2023). The item discusses the new regulation on the buy-to-let sector, of which Rotterdam was the first in the Netherlands to implement. Assistant Professor Mathijs Korevaar and Professor Sjoerd van Bekkum of Erasmus School of Economics did a study on the effects of this new regulation. In virtue of this study, Korevaar was asked by the Telegraph to elaborate on the researchers' findings.
The regulation on the buy-to-let market is active in 16 of Rotterdam’s 71 neighbourhoods and prohibits investors who buy a property worth less than €355,000 from renting it out for the first four years.
Core findings
The researchers' study finds that the number of properties bought by investors shrunk by 23 percentage points and first-time buyer purchases rose by 14 percentage points. However, the study also found that the regulation pushed up rents for tenants in regulated neighbourhoods by approximately 4 percentage points. This damages housing affordability for renters and thus partly undermines the intentions of the law.
Long term consequences
The item also uses the study to touch upon some of the long term impacts the buy-to-let regulation could have. The Assistant Professor explains how the buy-to-let regulation gentrifies neighbourhoods. Specifically, homeowners on average earn more, are three years older and less likely to be migrants than renters.
Moreover, Korevaar notes that the prices of houses in neighbourhoods where the regulation is not active might increase in the long-term. He explains how the regulation may create sought-after neighbourhoods where the regulation is not active. This is due to neighbourhoods with lots of renters being characterized by less desirable characteristics. More affluent households might be willing to pay a premium to avoid these neighbourhoods.
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For the full item by the Telegraph, 2 October 2023, click here.