Atlantic Sentinel

Tag: Housing

  • Everyone Thinks the Netherlands’ Rental Reforms Are Nuts

    Amsterdam Netherlands
    Muntplein in Amsterdam, the Netherlands, March 27, 2021 (Unsplash/Ruben Hanssen)

    The Netherlands is becoming a case study in how not to regulate rents. An expansion of rent control is driving investors and landlords to despair. Appeals by banks, pension funds, the International Monetary Fund (IMF) and Organization for Economic Cooperation and Development (OECD) are falling on deaf ears in The Hague.

    The European Commission is the latest international body to urge the Dutch government to reconsider. In its annual policy recommendations to member states, it cautions the Netherlands that its “policies regarding the private rental market risk undermining its development.”

    [T]he private rental market is relatively small, which results in a limited supply of affordable and available alternatives to buying a house. The lack of affordable rental housing also undermines labor mobility.

    There are 440,000 job openings. 360,000 Dutch people are still unemployed. A shortage of affordable housing, especially in major cities, is a factor. The average waiting time for a nonprofit social-housing apartment in Amsterdam is thirteen years. Yet the government would make it less lucrative to rent out homes for profit. (more…)

  • Spain’s Rental Reforms, Explained

    Barcelona Spain
    Skyline of Barcelona, Spain (Unsplash/Anastasiia Tarasova)

    Spanish prime minister Pedro Sánchez has agreed to cap rent increases through 2025 and subsidize the construction of more low-rent housing in a deal with Basque and Catalan left-wing parties in Congress.

    Sánchez hopes to get the reforms through Congress before the municipal elections in May, but his government does not yet have a majority and his Socialist Workers’ Party is down in the polls.

    I’ll explain what the reforms are, why the government believes they are needed and whether they are likely to pass. (more…)

  • Overregulation Drives Up Rental Prices in Dutch Cities

    Amsterdam Netherlands
    Rokin in Amsterdam, the Netherlands, November 19, 2019 (Unsplash/Kian Lem)

    Regulation is driving up rents in the major cities of the Netherlands — and exacerbating the nation’s record housing shortage.

    According to Pararius, a real-estate listings website, average rents have gone up 4 percent in Amsterdam, The Hague and Rotterdam this year.

    Rents rose 11 percent in Amsterdam last year.

    Pararius’ Jasper de Groot blames the Dutch housing minister, Hugo de Jonge, who is bringing some 330,000 rental apartments into regulation. (more…)

  • Dutch to Ease, After Tightening, Building Rules

    Hugo de Jonge
    Dutch housing minister Hugo de Jonge visits a building site in Rijswijk, January 14, 2022 (BZK)

    The Dutch government wants to make it easier to build new homes — after it made it harder.

    Housing minister Hugo de Jonge, a Christian Democrat in a coalition of four parties that includes my own, told parliament he wants to defeat NIMBYism with four proposals:

    We owe it to all those looking for a house to do whatever we can to speed up home construction.

    I wish he had thought of that a year ago, when he started the job. (more…)

  • Rent Control Keeps Failing. Countries Keep Trying

    Madrid Spain
    The sun rises over the Gran Vía of Madrid, Spain (Unsplash/Arw Zero)

    So politicians understand how prices work after all.

    Spain, Germany and the Netherlands are capping prices of electricity and heating for consumers. Energy providers are still paying high prices for oil and record prices for natural gas due to Russia’s war in Ukraine, so governments will make up the difference.

    The price energy providers charge is based on their costs plus a profit. If they can’t pass higher costs on to consumers, they would either have to cut their own costs, for example by laying off staff; scale up, which isn’t easy in Europe’s heavily regulated energy market; or fail.

    Somehow that logic is lost on many when it comes to housing. The same three countries have capped, or are capping, rents, but there is no compensation for landlords. Nor for developers, who can sell fewer rental apartments.

    Landlords make up the difference by underinvesting in maintenance. Developments simply don’t happen.

    Which are then used as arguments for even more regulation. (more…)

  • Why the Netherlands Isn’t Building

    Rotterdam Netherlands
    Rotterdam, the Netherlands at night, May 16, 2018 (Unsplash/Stijn Hanegraaf)

    The Netherlands has a housing shortage of 300,000. The government’s ambition is to build 100,000 homes per year to keep up with population growth (which is entirely driven by immigration), but there is doubt it will meet this goal.

    75,000 homes were built last year. Only 33,000 building permits were issued in the first half of 2022.

    For a story in Wynia’s Week, I asked builders, developers, the construction lobby, economists and housing corporations why the going is so slow. They gave me ten reasons.

    Some are Netherlands-specific. Provincial governments, which must parcel in building locations, underestimated population growth. Municipalities, which issue building permits, are understaffed. Judges won’t approve permits if construction causes nitrogen pollution and emissions from farms and industry aren’t reduced. (More on the Netherlands’ farm and nitrogen crisis here.)

    Others are hopefully temporary: high prices of fuel, steel and wood caused by the war in Ukraine.

    The remaining four explanations are relevant to other countries. (more…)

  • Dutch Government Created Housing Shortage, Blames Market

    Almere Netherlands
    Homes in Almere, the Netherlands, October 17, 2020 (Unsplash/Daria Nepriakhina)

    Few countries regulate housing more tightly than the Netherlands, yet politicians keep blaming “the market” when there isn’t enough (affordable) housing.

    Housing minister Hugo de Jonge recently told Trouw that, “For too long, we believed the market would solve the problems on its own.”

    In an op-ed for the same newspaper, I argue the opposite is true: government won’t leave the housing market alone. (more…)

  • Biden’s Housing Policies Are Steps in the Right Direction

    Boston Massachusetts
    Aerial view of Boston, Massachusetts, October 22, 2010 (Thomas Hawk)

    Joe Biden has unveiled five new policies to alleviate America’s housing shortage.

    Two are related to financing, which I’m not qualified to assess. The goal is to make it easier for low-income Americans to build and buy homes. I just hope that doesn’t lead to a repeat of the subprime mortgage crisis, which was at least partly caused by the federal government underwriting mortgage loans homeowners could not afford.

    A third seeks to make it more difficult for investors to buy family homes. I don’t know if that’s worth the tradeoff, but there is one. The left-wing city government of Amsterdam has done the same, arguing all investors do is buy properties, renovate them and raise rents. But that renovation part is important! Maintaining buildings that are centuries old is expensive. Investors raise rents to recuperate the costs, but at least they can spread out those costs over multiple renters and multiple years. Banning property investment could cause monumental buildings to either become unaffordable to all but the wealthy or fall into disrepair, which happened in Amsterdam during the 1930s and 40s, and is why entire neighborhoods, like the Jewish Quarter, were demolished after the Second World War.

    Biden’s last two policies are the most interesting to me: ending discrimination against prefabricated and modular homes and encouraging local zoning reform. (more…)

  • Expropriation Unlikely in Berlin, But So Is Cheaper Housing

    Berlin Germany
    Tower blocks in Berlin, Germany, May 3, 2020 (Unsplash/Sebastian Herrmann)

    Berliners voted in September to expropriate apartments from large landlords. 56 percent supported the proposal in a referendum, which would put around 243,000 of the city’s 1.5 million rental apartments in public ownership.

    I argued against expropriation at the time, and have written a follow-up for the Dutch opinion website Wynia’s Week in which I argue the city is unlikely to go through with it. It is a bad proposal, one that is opposed by even the center-left, and it may not stand up in court.

    Unfortunately, that doesn’t mean either the city or the federal government is likely to ease Berlin’s housing shortage. (more…)

  • Spain Tries to Solve Yesterday’s Housing Crisis

    Barcelona Spain
    Buildings in Barcelona, Spain, December 10, 2017 (Unsplash/Marco Da Silva)

    Spain’s ruling left-wing parties have agreed various measures to make housing more affordable, including a rent cap and higher property taxes.

    The proposals are unlikely to be effected in areas ruled by conservatives, and they are right to block them. The pandemic has already made housing more affordable in Spain. The country doesn’t need the government to step in. (more…)

  • German Left Has Wrong Ideas for Housing Market

    Berlin Germany
    View of Berlin, Germany from Alexanderplatz, March 28, 2020 (Unsplash/Stefan Widua)

    Housing is one of the top issues in the German election on Sunday. Proposals reveal a traditional left-right divide: the Social Democrats and Greens seek to rein in prices with rent controls; the Christian Democrats and liberal Free Democrats call for more construction, including by relaxing planning laws and other regulatory requirements.

    Coinciding with the federal election, a referendum in Berlin will decide whether the city-state expropriates about 200,000 homes.

    The proposal is for private landlords owning more than 3,000 properties to be “socialized”. Supporters argue this would lower prices, as the houses would no longer need to be profitable, but this betrays a simplistic understanding of the market. If the government makes it impossible for developers and landlords to turn a profit, they will develop and rent out fewer apartments and the housing shortage will grow, not shrink.

    That’s exactly what happened when Berlin froze rents last year: the number of apartments on the market dropped 57 percent. Owners kept their flats empty while the Constitutional Court reviewed the new law. It ruled in April that the freeze was unlawful. Renters had to suddenly pay a year’s worth of missed rent increases.

    Now left-wing parties want to try the same nationally. (more…)

  • Swedish Housing Crisis Has Similarities with Netherlands

    Stockholm Sweden
    Early morning in Stockholm, Sweden (iStock/Marcus Lindstrom)

    Stefan Löfven may be Europe’s first prime minister brought down by a housing crisis, but he is unlikely to be the last.

    Löfven, a social democrat, lost the support of the far left over a proposal to allow landlords to freely set rents for newly-built apartments.

    Rents in Sweden are usually negotiated between landlords and tenants’ associations.

    Other countries struggle to find the right balance between public and private in housing too. Berlin instituted a citywide rent freeze last year, but it was struck down as unconstitutional by Germany’s highest court. Spain’s central government is challenging a Catalan rent cap. Authorities in Barcelona want to extend a moratorium on evictions that has been in place since the beginning of the COVID-19 pandemic.

    But perhaps the best comparison is with the Netherlands, which organizes public housing in much the same way as Sweden. (more…)

  • Be Careful About Bringing Back Big Government

    Union Station Washington
    South Front Entrance of Union Station in Washington DC, July 4, 2019 (Unsplash/Caleb Fisher)

    Big government is back.

    Massive rescue programs have prevented business failures and unemployment on the scale of the Great Depression, even though last year’s economic contraction was nearly as bad. The European Union agreed a €750 billion recovery fund, financed, for the first time, by EU-issued bonds. The money comes on top of national efforts. The United States Congress passed a $2.2 trillion stimulus, worth 10 percent of GDP, in March and added $484 billion in April. An additional $900 billion in relief was included in this year’s budget.

    Joe Biden, the incoming president, wants to spend $2 trillion more over the next four years to transition the United States to a greener economy and create a public health insurance program. Corporate tax would go up from 21 to 28 percent.

    In Spain, a socialist government has introduced the biggest budget in Spanish history — partly to cope with the impact of coronavirus, but also to finance digitalization, electric cars, infrastructure, renewable energy and rural development. Taxes on income, sales and wealth are due to increase.

    In the United Kingdom, the ruling Conservative Party is building more social housing and thinking about renationalizing rail. Unlike during the last economic crisis, it does not propose to cut spending even though tax revenues are down.

    Same in the Netherlands, where all the major parties agree the government needs to do more to reduce pollution and prevent people at the bottom of the social ladder from falling through the cracks.

    I’m not opposed to more government per se. I’ve argued the United States should imitate the policies of Northern Europe to improve child care, health care and housing.

    But let’s be careful not to throw more government at every problem. Sometimes government is the problem. (more…)

  • Statism Makes a Comeback in the United Kingdom

    Cabinet Office London England
    The British flag flies over the Cabinet Office in London, England (Shutterstock/Willy Barton)

    Two months ago, I argued Britain was once again the sick man of Europe. It had the second-highest per capita COVID death rate among major countries. Economic output had fallen 20 percent from the year before.

    The crisis wasn’t lost on policymakers. The dual shock of coronavirus and Brexit — Britain formally left in 2019 but still applies EU rules and regulations this year — has led to something of a quiet revolution in Whitehall: the potential rebirth of the interventionist state.

    There is still much wrong with how the British government has handled both events, the poster child for COVID being the decimation of the British aviation and travel industry as well as the arts. Not since the closing of the coal mines has an entire industry shrunk so dramatically.

    Yet the seeds of a new statism have been sown — by a Conservative government. (more…)

  • Biden’s Housing Plan Emulates Europe

    Seattle Washington
    Homes in Seattle, Washington, April 21, 2011 (Harold Hollingsworth)

    One of the areas in which I think America should emulate Northwestern Europe is housing.

    Stagnant wages, restrictive building codes and underinvestment in construction have caused home prices to rise faster than wages in eight out of ten metro areas in the United States.

    Young Americans are one-third less likely to own a home at this point in their lives than their parents and grandparents, delaying their wealth accumulation and possibly family formation. Among young black Americans, homeownership has fallen to its lowest in more than sixty years. Americans of all ages are less likely to move, which has contributed to a decline in social mobility and an increase in regional inequality.

    I like the Dutch system, which is a combination of government-built social housing rented out at below-market prices and rental subsidies, which can reach up to a third of the average private rent, and for which about one in five households qualify.

    Turns out that’s close to Joe Biden’s plan. (more…)