Economic effects of regulating and subsidizing the rental housing market.

This study analyses the effects of these policies on rents, demand for and supply of rental units, tenant’s incomes and welfare effects. This shows that the policies reduce rents to tenants by almost 50%, at an annual cost of 14½ bln euros. Only 6¾ bn euros reach the low income households for which it is primarily intended. The rest is pocketed by middle or high income households. This is an important cause of the problems that currently blight the rental housing market. Many cheap rental units are occupied by middle and high income families, whereas many low income families cannot find affordable housing and first time renters typically have to wait several years before they are eligible for a house. As a result the social costs of the policy outweigh the gains by an average of one thousand euro per rental unit per year.

This publication is in Dutch.