Rotterdam Investor Ban Fails to Lower Home Prices, Drives Up Rents

Oh The Urbanity!

Barring investors from buying homes fails to reduce purchase prices and instead penalizes lower-income tenants by shrinking rental supply and accelerating gentrification.

AI-assisted summary of What Happened When This City Banned Housing Investors — original source. Check the original for full context.

Source published: 2023-09-24

Key ideas

Rotterdam implemented a 'purchase protection' policy banning buy-to-let investments on homes assessed under €405,000 across 16 neighborhoods, covering about one-third of the city's population. (0:00)
Two independent studies found that Rotterdam's investor ban failed to lower home purchase prices, but reduced rental availability and drove citywide rents up by 4%. (2:24)
Restricting private rentals accelerated neighborhood gentrification, shifting demographics toward older, wealthier, and native-born Dutch residents while curtailing housing options for lower-income renters. (2:24)
High-density Canadian developments often stereotyped as purely investor-driven show substantial owner-occupancy rates, including 54% in Yaletown and 55% in Griffintown. (3:34)

Detailed notes

## Background Published on YouTube by the urban planning channel Oh The Urbanity! on September 24, 2023, this video explores the common argument that real estate investors—rather than supply shortages—are the primary cause of the housing crisis. Drawing on the real-world policy experiment in Rotterdam, Netherlands, where the city banned buy-to-let housing, the creators examine the actual economic and social consequences of restricting property investors.

## TL;DR The video analyzes Rotterdam's 2021 purchase protection law, which banned investors from buying lower-priced homes to rent out across 16 neighborhoods. Two academic studies revealed that while the policy increased homeownership among middle-income owner-occupants, it failed to lower purchase prices, caused citywide rents to spike by 4%, and displaced lower-income, younger, and immigrant renters in favor of older, wealthier buyers. Using Canadian census data, the hosts counter the myth that high-density developments solely serve investors and caution that anti-investor rhetoric frequently blurs into anti-renter prejudice. Ultimately, the channel presents a hierarchy of real estate investment—ranking new construction as most productive and pure price speculation as most damaging—arguing that true housing affordability requires building abundant market and non-market supply rather than penalizing rental tenure.

## Atmosphere & style The presentation is measured, analytical, and distinctly data-driven, pairing clear-headed economic critique with an accessible, grounded narration style. Rather than indulging in populist outrage, the hosts patiently dismantle emotionally charged talking points using empirical academic research and clear charts. The tone balances deep progressive empathy for vulnerable renters with pragmatic realism about housing markets, concluding on a sharp, thought-provoking philosophical critique of treating shelter as an entitlement to asset appreciation.

## Bulletin - [00:00](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=0s) Rotterdam implemented a 'purchase protection' policy banning buy-to-let investments on homes assessed under €405,000 across 16 neighborhoods, covering about one-third of the city's population. - [02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) Two independent studies found that Rotterdam's investor ban failed to lower home purchase prices, but reduced rental availability and drove citywide rents up by 4%. - [02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) Restricting private rentals accelerated neighborhood gentrification, shifting demographics toward older, wealthier, and native-born Dutch residents while curtailing housing options for lower-income renters. - [03:34](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=214s) High-density Canadian developments often stereotyped as purely investor-driven show substantial owner-occupancy rates, including 54% in Yaletown and 55% in Griffintown.

## Key takeaways - [00:00](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=0s) A prevalent theory blames the housing crisis primarily on real estate investors outbidding first-time buyers rather than physical shortages or restrictive zoning. - [00:00](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=0s) In 2019, nearly 20% of homes across the Netherlands and roughly 30% in major urban centers were purchased by buy-to-let investors. - [00:00](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=0s) The Dutch government passed legislation in 2021 permitting municipalities to introduce purchase protection bans on buy-to-let transactions. - [00:00](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=0s) Rotterdam applied its investor ban to 16 of 71 neighborhoods, specifically targeting areas with high investor activity outside the city core. - [02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) Empirical studies comparing regulated and unregulated neighborhoods in Rotterdam showed that banning investors did not decrease home purchase prices. - [02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) The policy increased homeownership among middle-income buyers strictly at the expense of lower-income renters by shrinking the rental stock. - [02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) Restricting rental supply across regulated areas led to an overall 4% increase in rental rates throughout Rotterdam. - [02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) Regulated neighborhoods experienced demographic shifts toward older, wealthier, and native-born occupants, worsening gentrification and excluding younger residents and immigrants. - [03:34](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=214s) High-density urban master plans in Canada demonstrate that newly built dense neighborhoods sustain high levels of owner-occupancy alongside rentals. - [03:34](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=214s) Treating investor-owned properties as 'disappeared' housing wrongly implies rental housing does not count as legitimate, essential shelter. - [03:34](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=214s) Anti-investor rhetoric often blurs into exclusionary, anti-renter prejudice during municipal public consultations. - [06:07](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=367s) Expanding non-market and social housing requires directly funding and constructing public housing rather than simply banning private rentals. - [06:07](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=367s) Building new housing represents the most socially productive way to earn real estate returns by adding physical supply to the market. - [06:07](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=367s) Renting out housing provides an essential service for households unable or unwilling to purchase, despite inherent power imbalances requiring tenant protections. - [06:07](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=367s) Profiting from price appreciation and speculation is the least socially useful mechanism and incentivizes homeowners to oppose new local housing construction. - [06:07](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=367s) The cultural assumption that housing must always serve as a protected, high-yielding investment remains fundamentally destructive to housing affordability.

## Detailed walkthrough ### [00:00](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=0s) The Investor Ban Experiment in Rotterdam

A popular theory of the housing crisis suggests that the core issue is not a lack of physical homes or restrictive zoning laws, but rather a "scourge of investors" who buy up properties to rent them out. According to this perspective, these financial actors outbid aspiring first-time buyers, forcing them into the rental market. Commenters on the *Oh The Urbanity!* channel frequently echo this sentiment, with one arguing that “the investors are the prime cause of this housing crisis let's stop the gaslighting and verbal gymnastics,” and another asserting, “Take out the demand from investors and you have more than enough supply. Which drives costs down.” To test this theory, we can look at a real-world experiment conducted in Rotterdam, Netherlands.

```mermaid flowchart TD accTitle: Rotterdam Buy-to-Let Ban Effects accDescr: Flowchart showing the direct and indirect consequences of Rotterdam's purchase protection policy.

A["Rotterdam Buyout Protection Policy<br>(Ban on Buy-to-Let under €405k)"] --> B["Kicks Investors Out of Regulated Neighborhoods"] B --> C["Shift from Investors to Owner-Occupants"] B --> D["No Reduction in Home Purchase Prices"]

C --> E["Increased Homeownership Rate"] C --> F["Decreased Rental Availability"]

F --> G["4% Rent Increase Across Rotterdam"] F --> H["Demographic Shift (Gentrification)<br>(Older, wealthier, native-born residents)"] ```

In 2019, nearly 20% of homes in the Netherlands were purchased with the intent to rent them out, a figure that climbed to roughly 30% in major urban centers. In response, the Dutch government passed a law in 2021 allowing municipalities to ban the practice of buying a home to rent it out, aiming to give regular homebuyers an advantage over institutional and private investors. Rotterdam was the first major city to implement this "purchase protection" or "buyout protection" (*opkoopbescherming*) policy. The city applied the ban to 16 of its 71 neighborhoods, covering about one-third of the city's population, targeting areas just outside the city center where investor activity was most concentrated.

The policy targeted houses and apartments with a tax-assessed value of under 405,000 euros. The City of Rotterdam justified the policy by stating:

> “Many people who want to buy a house cannot. This is because there are investors who want to pay more for the same house. And start renting them out for a lot of money. Rental houses are often only rented out for a short time. Neighbors often do not know each other at all and that is not a pleasant way to live. This [policy] will give people more chances to buy a house for a reasonable price. For example, people who are buying a house for the first time or people who do not have that much money.”

[02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) The Unintended Consequences of Rotterdam's Policy

Because the ban was applied to some neighborhoods and not others, researchers were able to conduct two separate studies comparing the regulated areas with nearby unregulated neighborhoods. Both studies examined whether removing investors from the market succeeded in lowering home prices to make them more affordable. The studies reached the exact same conclusion: home prices did not fall. In the year or so of data available after the policy took effect, banning investors failed to bring down purchase prices for homebuyers.

While the policy did not make buying a home cheaper, the second study revealed that it did significantly alter the neighborhood dynamics. The ban successfully increased the homeownership rate, but it did so by drastically reducing the availability of rental housing. This supply squeeze caused rental prices across Rotterdam to rise by 4%.

Furthermore, the demographics of the regulated neighborhoods shifted. Because rental options vanished, the neighborhoods began to skew older, wealthier, and more heavily native-born Dutch, while shutting out younger people and immigrants. In practice, the policy designed to help vulnerable buyers ended up accelerating gentrification. As the study concluded:

> “While the ban-induced shift in purchases from investors to owner-occupants has enhanced homeownership access for middle-income households, it has curtailed housing opportunities for lower-income renter households.”

[03:34](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=214s) The Myth of the Disappearing Home and the Value of Rentals

In countries like Canada, media outlets frequently run stories detailing how much of the housing stock is owned by investors, prompting public outcry and claims that building new housing is pointless because investors will simply "scoop it up." However, this narrative suffers from major flaws. First, new high-density developments actually provide massive opportunities for owner-occupancy. For example, census tracts in newly developed, high-density urban areas show high rates of homeownership: - **Yaletown (Vancouver):** 54% owner-occupied - **CityPlace (Toronto):** 39% owner-occupied - **Griffintown (Montreal):** 55% owner-occupied

These developments, which are often stereotyped as being purely for "investors," actually provide owned homes for thousands of families.

The second, more fundamental issue is the assumption that investor-owned properties "disappear" from the housing market. This mindset implies that rental housing does not "count" as real housing. In reality, rental housing is a vital tenure. Many people prefer renting for its flexibility, the lack of maintenance responsibilities, and the ability to avoid tying up their net worth in a single, illiquid real estate asset. More importantly, rentals are the only accessible housing option for those who are not financially ready to buy.

When policies restrict rentals to promote homeownership, they often end up excluding lower-income residents. This exclusion is sometimes an intentional feature of local politics, fueled by a pervasive anti-renter sentiment. During public consultations, residents often express a desire to keep renters out of their neighborhoods because renters skew younger, have lower incomes, and are more likely to be immigrants. There is a very thin, blurry line between anti-investor rhetoric and anti-renter prejudice. As the hosts point out:

> “A lot of the rhetoric about how “we need housing for people, not investors” is, intentionally or not, sending the message to renters that because they don’t own where they live, they don’t really live in a home, they live in someone else’s investment.”

[06:07](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=367s) The Hierarchy of Housing Investments

When confronted with the importance of rental housing, critics often argue that while rentals are necessary, the private rental market is inherently exploitative and that all rental housing should instead be run by governments or non-profits. While the hosts strongly support expanding non-market and social housing, they emphasize that this must be achieved by actively funding and constructing non-profit housing, rather than simply banning private rentals and hoping for the best. To avoid the unintended consequences seen in Rotterdam, cities should focus on building more housing of all types—both market-rate and non-profit—rather than trying to forcibly shift existing housing from renters to buyers.

To clarify how we should view money in real estate, the hosts propose a hierarchy of three ways to make money from housing, ranked from the most socially productive to the least useful:

1. **Building Housing:** This is the most productive activity. Developers are physically creating new homes that people desperately need. Decrying developer profits is as illogical as calling farming a "giveaway to farmers." 2. **Renting Out Housing:** While landlords do not physically build new structures (unless they financed the initial construction), they perform a service by making housing accessible to those who cannot or do not want to buy. While strong tenant protections are necessary to balance the power dynamic, rentals remain crucial for younger, lower-income, and immigrant populations. 3. **Price Appreciation (Speculation):** This is the least socially useful way to make money, as the profit comes from doing nothing productive. Worse, the desire to "protect" this investment often drives homeowners to oppose new housing construction and legally exclude less wealthy people from their neighborhoods.

The video concludes by arguing that the cultural expectation that housing must always be a high-yielding, protected investment is incredibly damaging to society.

> “The pervasive idea that owning housing should be a good investment that should be protected, supported, and encouraged by government policy is one of the most destructive ideas of our time, whether it comes from the multiple property owning class or individual homeowners.”

With that final thought, the hosts thank their Patreon supporters and sign off with their signature urbanist catchphrase: "Don’t forget to bike and subscribe!"

## Notable quotes > [06:07](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=367s) The pervasive idea that owning housing should be a good investment that should be protected, supported, and encouraged by government policy is one of the most destructive ideas of our time, whether it comes from the multiple property owning class or individual homeowners. — Oh The Urbanity!

> [02:24](https://www.youtube.com/watch?v=BRqZBuu_Ers&t=144s) While the ban-induced shift in purchases from investors to owner-occupants has enhanced homeownership access for middle-income households, it has curtailed housing opportunities for lower-income renter households. — Rotterdam housing study authors

## Mentioned Oh The Urbanity!, Rotterdam, Netherlands, City of Rotterdam, Canada, Yaletown, Vancouver, CityPlace, Toronto, Griffintown, Montreal, Pieter Reitsma, SSRN, Dutch News, YouTube, Patreon, Twitter

## Video description There’s a theory of housing that says the problem we’re facing is fundamentally not a lack of homes or restrictions on building and density. Instead, we face a scourge of investors who buy homes not to live in but to rent out, taking away options from aspiring home buyers and forcing them into renting. As one comment on our channel argued, “the investors are the prime cause of this housing crisis let's stop the gaslighting and verbal gymnastics”. What we really need, then, is to encourage homeownership and clamp down on investors who outbid first-time-homebuyers. “Take out the demand from investors and you have more than enough supply. Which drives costs down.”, according to another commenter on one of our videos. Well, clamping down on investors is exactly what Rotterdam in the Netherlands tried to do — here’s how it turned out.

Keep Urbanity rolling:

Join our Patreon for early releases: https://www.patreon.com/ohtheurbanity Subscribe: https://www.youtube.com/channel/UCN5CBM1NkqDYAHgS-AbgGHA?sub_confirmation=1 Join us on Twitter: https://twitter.com/OhUrbanity

References:

First study on Rotterdam: https://frw.studenttheses.ub.rug.nl/3913/1/Master%20Thesis%20final%20version%20Pieter%20Reitsma%2017-7-2022.pdf Second study on Rotterdam: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4480261 News coverage: https://www.dutchnews.nl/2023/06/buy-to-let-ban-is-good-for-first-time-buyers-but-bad-for-tenants/ City of Rotterdam policy page: https://www.rotterdam.nl/opkoopbescherming

[Source](https://www.youtube.com/watch?v=BRqZBuu_Ers)

中文简报

鹿特丹投资者禁令未能压低房价，反推高租金禁止投资者购房未能降低房屋售价，反而因缩减租赁供应并加速士绅化而对低收入租户造成不利影响。该视频分析了鹿特丹2021年实施的购买保护法，该法禁止投资者在16个社区购买低价住宅用于出租。两项学术研究显示，尽管该政策提高了中等收入自住者的住房拥有率，但未能降低购房价格，导致全市租金上涨4%，并挤出了低收入、年轻及移民租户，取而代之的是年龄更大、更富有的购房者。主持人利用加拿大人口普查数据反驳了高密度开发项目仅服务于投资者的迷思，并提醒注意反投资者言论往往会演变为针对租客的偏见。最终，该频道提出了房地产投资的层级结构——将新建建筑列为最具有生产力的投资，将纯粹的价格投机列为最具破坏性的投资——并认为真正的住房可负担性需要建设充裕的市场化和非市场化住房供应，而非惩罚租赁产权。鹿特丹实施了“购买保护”政策，在16个社区禁止对评估价值低于40.5万欧元的住宅进行买房出租类投资，覆盖该市约三分之一的人口。 (0:00) 两项独立研究发现，鹿特丹的投资者禁令未能降低购房价格，却减少了可租房源，并导致全市租金上涨4%。 (2:24) 限制私人租赁加速了社区士绅化，使人口结构转向年龄更大、更富有且在荷兰出生的本地居民，同时缩减了低收入租户的住房选择。 (2:24) 通常被刻板认为是纯粹由投资者驱动的加拿大高密度开发项目，实际上显示出相当高的自住率，其中耶鲁镇达54%，格里芬敦达55%。 (3:34)

Reading summary

Testing the theory that property investors drive the housing crisis, evidence from a Rotterdam buy-to-let ban shows that eliminating investors does not lower home prices and instead harms renters by reducing rental availability and accelerating gentrification. Rotterdam's Experiment With Buyout Protection (0:00) In 2019, nearly 20% of residential properties in the Netherlands—and roughly 30% in major urban centers—were bought to rent out. In response, a 2021 Dutch law allowed cities to ban buy-to-let purchases. Rotterdam implemented this buyout protection policy across 16 of its 71 neighborhoods, covering approximately one-third of the population and targeting houses and apartments with tax-assessed values under €405,000. Municipal officials justified the policy by arguing that it would stop investors from outbidding prospective owner-occupiers and help first-time buyers with limited funds secure housing at reasonable prices. Unintended Effects on Prices and Demographics (2:24) Two studies evaluating Rotterdam's ban compared regulated neighborhoods with adjacent unregulated areas using about a year of post-policy data. Both studies found that eliminating investors failed to reduce home purchase prices. While the policy successfully shifted transactions from investors to owner-occupants, it severely constrained rental supply, which triggered a 4% increase in rental prices across Rotterdam. The reduction in rental housing also triggered demographic shifts in the targeted neighborhoods. The regulated areas grew older, wealthier, and more heavily native-born Dutch, while younger residents and immigrants were increasingly shut out. As researchers highlighted, expanding homeownership access for middle-income households ended up curtailing critical housing options for lower-income renters. The Flawed Narrative Around Rental Housing (3:34) Public debate often presumes that investor-owned properties vanish from the housing market and that building new high-density units only serves investors. However, Canadian census data illustrates that high-density developments maintain substantial owner-occupancy rates, including 54% in Vancouver's Yaletown, 39% in Toronto's CityPlace, and 55% in Montreal's Griffintown. Treating investor purchases as housing lost ignores the vital role of renting for people who need mobility, want to avoid maintenance obligations, or lack the capital to purchase property. Anti-investor arguments often blur into anti-renter sentiment, functioning politically to exclude lower-income and immigrant households under the premise that rental units do not constitute legitimate homes. Ranking Social Productivity in Housing Finance (6:07) Addressing housing shortages requires expanding total supply—both market-rate and non-profit housing—rather than forcibly transferring properties from renters to buyers. To evaluate housing finance, activities can be ranked by their social utility: physically constructing new housing is the most productive activity, renting out properties performs a necessary social service for those who cannot or do not want to buy, and unearned price appreciation through speculation is the least socially useful. The channel concludes that policies treating homeownership as a guaranteed, high-yielding investment encourage homeowners to oppose new housing construction and legally exclude less affluent residents, producing one of the most destructive societal dynamics in modern housing policy.

精炼阅读摘要

频道 Oh The Urbanity! 指出，荷兰鹿特丹禁止买房出租（buy-to-let）的政策实验表明，将房地产投资者驱逐出市场不仅未能降低房屋售价，反而导致租赁房源缩减、全市租金上涨并加速了社区绅士化。该案例显示，将住房危机完全归咎于投资者并限制租赁，最终会转嫁成本并损害中低收入租客的利益。鹿特丹“购房出租禁令”实验 (0:00) 在荷兰，2019年有近20%的房屋被购买用于出租，在主要大城市这一比例更高达约30%。公众与部分评论者普遍认为，投资客的大量入场推高了购房门槛，将首次购房者挤入租赁市场。为应对这一问题，荷兰政府于2021年立法允许各城市实施“购买保护”（opkoopbescherming）政策，鹿特丹随后成为首个执行该禁令的大城市。鹿特丹将禁令应用于全市71个社区中的16个（覆盖约三分之一人口），重点针对市中心外围投资活跃的区域，规定税务评估值在40.5万欧元以下的房产不得用于购买后出租。市政府将该政策的目标定位于遏制投机竞争、让首套房买家和资金有限的群体以合理价格购房，并改善租客频繁流动导致的邻里疏离。房价未降、租金上涨与社区绅士化 (2:24) 研究人员对比受管制区域与未受管制区域的两项实证研究显示，禁令实施一年多以来，受管制社区的房屋销售价格并没有如预期出现下降，剔除投资者并未让普通家庭买房变得更便宜。与此同时，政策产生了显著的负面溢出效应。虽然自住率有所上升，但租赁房源的供给大幅缩减，直接导致鹿特丹全市租金水平上涨了4%。此外，受管制社区的人口结构发生了明显改变。由于租房途径被切断，相关街区的新迁入人口显著偏向年龄更大、收入更高以及荷兰本土出生的群体，而年轻群体和移民家庭则遭到排挤。正如研究所指出的，这一旨在保护弱势购房者的政策，虽然增加了中等收入家庭的置业机会，却严重压缩了低收入租房群体的生存空间，客观上加速了富裕阶层迁入的绅士化进程。租赁住房的实际价值与排他偏见 (3:34) 节目指出，加拿大等国媒体常借投资者持房比例渲染“新建住房无用论”，声称新房全被投资者抢占，但这一论调忽略了客观现实。普查数据显示，温哥华 Yaletown（54%）、多伦多 CityPlace（39%）和蒙特利尔 Griffintown（55%）等常被贴上“投资者专属”标签的高密度新建街区，实际上为大量家庭提供了高比例的自住房。更严重的问题在于，公众舆论常预设“被投资者购买的房子从市场上消失了”，暗含着租赁房屋不算真正居所的偏见。现实中，租赁具有高度灵活性、免除维护成本且不锁死流动资金，也是尚无力购房者的关键兜底手段。在许多社区听证会上，反对投资者往往与排斥租客的心理交织在一起，演变成利用政策将偏向年轻、低收入和移民背景的租客群体驱逐出社区的手段。房产收益的三层层级与供给导向 (6:07) 针对“私人租赁具有剥削性、应完全由非营利或公营住房替代”的观点，节目指出，发展社会保障住房必须依托政府实际出资建造，而非单纯取缔私人租赁并寄望问题自行解决。为厘清房地产中的资本属性，节目提出了住房收益的三层社会价值排序：最具生产力的是“建造房屋”，开发商实质性增加了社会紧缺的物理供给；居中层面是“出租房屋”，房东虽然不直接造楼，但提供了让无力或不愿购房者获得居所的运营服务；最缺乏社会效用的是“资产升值与投机”，其收益完全不来源于生产活动，甚至反向激励房产业主反对新建房产以维持稀缺性。节目总结强调，无论是多套房业主还是普通自住房家庭，那种认为“拥有住房应当是一项受政府政策保护与鼓励的高回报投资”的观念，是当下最具破坏性的社会认知之一。解决住房危机的出路不能依赖于强行在买家与租客之间剥离存量房源，而必须集中于大力扩充包括市场化和非营利住房在内的各类物理供给。

Source quotes

[6:07] Oh The Urbanity!: The pervasive idea that owning housing should be a good investment that should be protected, supported, and encouraged by government policy is one of the most destructive ideas of our time, whether it comes from the multiple property owning class or individual homeowners. [2:24] Rotterdam housing study authors: While the ban-induced shift in purchases from investors to owner-occupants has enhanced homeownership access for middle-income households, it has curtailed housing opportunities for lower-income renter households.

Original transcript

[0:00] There’s a theory of housing that says the problem we’re facing is fundamentally not a lack of homes [0:06] or restrictions on building and density. Instead, we face a scourge of investors who buy homes not [0:12] to live in but to rent out, taking away options from aspiring home buyers and forcing them into [0:18] renting. As one comment on our channel argued, “the investors are the prime cause of this [0:24] housing crisis lets stop the gaslighting and verbal gymnastics”. What we really need, then, [0:30] is to encourage homeownership and clamp down on investors who outbid first-time-homebuyers. “Take [0:37] out the demand from investors and you have more than enough supply. Which drives costs down.”, [0:42] according to another commenter on one of our videos. Well, clamping down on investors is [0:48] exactly what Rotterdam in the Netherlands tried to do — here’s how it turned out. [0:53] In 2019, almost 20% of homes in the Netherlands were bought with the intention of renting them [0:58] out, climbing to around 30% in major urban areas. In 2021 the Dutch government introduced a law [1:06] allowing municipalities to ban buying a home to rent it out, in order to give regular homebuyers [1:11] a leg up over investors. Rotterdam was the first major municipality in the country to make use of [1:18] this option, applying it to 16 of the city’s 71 neighbourhoods, covering about a third of the [1:24] population of the city, mostly just outside of the city centre where investor activity was higher. [1:29] That’s an opportunity to study the effect of the law by comparing what happens in regulated [1:34] neighbourhoods after the law takes effect with nearby neighbourhoods where the law doesn’t apply. [1:40] Here’s how Rotterdam explains its purchase protection or buyout protection policy, [1:45] which applies to houses and apartments with a tax-assessed value under 405,000 [1:50] euros: “Many people who want to buy a house cannot. This is because there are investors [1:56] who want to pay more for the same house. And start renting them out for a lot of money. [2:01] Rental houses are often only rented out for a short time. Neighbors often do not know each [2:06] other at all and that is not a pleasant way to live. This [policy] will give people more [2:11] chances to buy a house for a reasonable price. For example, people who are buying a house for [2:16] the first time or people who do not have that much money.” How well did it work? We actually have two [2:24] studies here. Both studies looked at the effect of the policy on home prices. With investors out [2:29] of the way, do home prices fall to become more affordable? Both studies found the same result: [2:35] no. At least in the year or so after the policy came into effect that they had data for, [2:41] kicking investors out of these neighbourhoods did not seem to bring prices down for homebuyers. [2:47] The second study went further and looked into other effects of the law. While it [2:52] didn’t reduce the price to buy a home, it did increase the homeownership rate and decrease [2:56] rental availability. This raised rents by 4% in Rotterdam and changed the demographics of the [3:03] regulated neighbourhoods. With more homeowners and fewer renters, these neighborhoods started [3:08] to shift to become older, wealthier, and more likely to be native-born Dutch instead [3:13] of immigrants. In other words, trying to limit investors seems to have encouraged [3:18] gentrification! The study concluded: “While the ban-induced shift in purchases from investors to [3:24] owner-occupants has enhanced homeownership access for middle-income households, [3:29] it has curtailed housing opportunities for lower-income renter households.” [3:34] It feels like we see articles every few weeks about how much of Canada’s housing stock is [3:39] bought by investors, followed by a long list of commenters explaining that there’s no point [3:43] in building more housing if it’s just going to get scooped up by investors as part of [3:47] their portfolio instead of being a place to live for regular people. There are multiple problems [3:53] with this. First, new housing developments do usually come with significant opportunities for [3:58] ownership. This census tract covering Yaletown in Vancouver is 54% owner-occupied; this census [4:06] tract covering most of CityPlace in Toronto is 39% owner-occupied; and this census tract [4:12] in Griffintown in Montreal is 55% owner-occupied. These are all relatively new developments that [4:18] people associate with “investors” that provide owned homes for literally thousands of families. [4:24] The second and maybe bigger problem is that people talk about investors “taking homes [4:29] off the market” as if they make housing disappear and rentals don’t really “count” [4:33] as housing. The problem is that, on top of the reasons someone might actually prefer to rent, [4:39] like not worrying about maintenance, keeping the flexibility to move, or not wanting to tie up so [4:44] much of their money in one illiquid asset in one housing market, rentals are actually [4:48] really important for making housing accessible to people who just aren’t in a financial position to [4:53] own. As we saw in these Rotterdam results, laws that encourage homeownership and reduce [4:59] the availability of rentals don’t necessarily open up homeownership to lower income people. [5:03] They can have the effect of excluding lower income people and pushing them out. [5:08] The scary thing is that this isn’t always unintentional. There are absolutely lots of [5:13] people who identify “investors” as the source of the housing crisis out of a genuine concern [5:19] for regular people and first time homebuyers. But we’ve also followed enough public consultations on [5:25] new housing policies and developments to know that there’s a really pervasive anti-renter [5:29] sentiment out there. [“I’ve seen cities of renters and it’s ugly.”] A lot of people are [5:37] genuinely excited at the prospect of using the law to exclude renters — who are on average younger, [5:42] lower income, and more likely to be immigrants — from their neighbourhoods. There’s a thin and [5:48] blurry line between anti-investor sentiment and anti-renter sentiment. A lot of the rhetoric [5:53] about how “we need housing for people, not investors” is, intentionally or not, [5:58] sending the message to renters that because they don’t own where they live, [6:02] they don’t really live in a home, they live in someone else’s investment. [6:07] Whenever we stress the importance of rentals, we get people responding by saying that “ok, [6:12] maybe rentals are useful, but the private rental market is exploitative; rentals should [6:17] be provided by governments and nonprofits”. And we completely support a greater role for non-profit [6:23] and non-market housing. But you achieve that by actually funding and building non-profit housing, [6:28] not by limiting the private rental market and hoping things will work out. In the end, [6:33] this was just a couple of studies on one country’s policies. It’s possible that other laws designed [6:39] differently could have a different effect, or that we’ll learn more about the effect of this [6:43] Dutch policy in the coming years. But right now we think it’s much more productive — and less likely [6:49] to have unintended consequences on lower-income renters — if we focus on building more housing, [6:54] both market-rate and non-profit, instead of trying to shift housing around from renters to buyers. [7:01] We actually agree that the mindset of housing as an investment can be extremely corrosive, [7:06] but it’s important to be clear what we mean. We can think about three main ways to make money [7:11] from housing. You can make money from building housing, from renting it out, or from simply [7:16] owning it and seeing its value appreciate. As far as we’re concerned, that’s the order from most [7:21] productive to least socially useful. The idea that a person or company would make money from [7:27] building housing doesn’t bother us at all. NIMBYs sometimes decry allowing more housing construction [7:33] as a “giveaway to developers” but that’s like saying that allowing land to be used for farming [7:37] is a “giveaway” to farmers. They’re creating something that people want and need, isn’t [7:43] that the best way to make money? One step down is renting out housing. You’re not necessarily [7:49] creating anything new, physically speaking, unless you actually financed the construction. [7:54] But by renting it out you are making the housing available in a different way, [7:58] to people who don’t want to buy or aren’t able. Landlords can have a lot of power over people [8:03] and we need strong tenant protections to keep them accountable, but as the Rotterdam study indicated, [8:09] rentals are in fact important to make housing accessible to younger people, [8:12] people with lower incomes, and people with an immigrant background. Finally, the least socially [8:19] useful way to make money from housing is just owning it and seeing its price go up, because the [8:23] value doesn’t come from anything productive that you did, for the most part. Even worse, wanting to [8:29] (quote-unquote) “protect your investment” can be actively counterproductive if it leads to fighting [8:34] against new housing or trying to legally exclude less wealthy people from your neighbourhood. [8:39] The pervasive idea that owning housing should be a good investment that should be protected, [8:44] supported, and encouraged by government policy is one of the most destructive ideas of our time, [8:49] whether it comes from the multiple property owning class or individual homeowners. [8:56] Thanks for watching through to the end of the video. Don’t forget to bike and subscribe, [9:00] and a special thanks to our supporters on Patreon.