Is Europe facing a housing crisis? For many Europeans, rents or mortgages have become their highest expenditure, and the situation seems to be getting worse as house prices are growing faster than income in most EU Member States. Over 11% of households in the EU are now considered “overburdened” when it comes to housing costs (meaning they spend more than 40% of their disposable income on keeping a roof over their heads). However, this figure hides the fact that poorer households are disproportionately affected – roughly 40% of people considered to be at risk of poverty are overburdened.

In several EU countries, including the UK, Belgium, the Czech Republic, Finland, Sweden, Greece, Denmark, Spain, and Luxembourg, at least one-quarter of an average households income routinely goes on rent (not including extra costs such as utility bills). What’s the solution? Is it as simple as just “build more houses, stupid”?

What do our readers think? We had a comment sent in from Thomas, who argues that it’s time to consider “capping rents” as a way to bring spiralling housing costs back under control. Is he right? Would rent controls really help address the affordable housing crisis, or would they just end up distorting the market and discouraging investment in new housing projects?

To get a response, we spoke to Sorcha Edwards, Secretary General of Housing Europe, a European federation of public, cooperative & social housing. How would she respond to Thomas’ suggestion?

To get another perspective, we put the same comment to Monica Brezzi, Director for Technical Assessment and Monitoring at the Council of Europe Development Bank (CEB). What would she say about rent controls?

Evidence on the effectiveness of rent control is quite mixed even since its first introduction in NY City after WWI. On the positive effect, data show that rent control increased the probability a renter remained in one’s home, thus helping to keep lower- and middle-income residents in real-estate attractive cities and contributing to development of socially mixed neighbourhoods. However, a restrictive rent cap can discourage investors and reduce the housing supply, drive out of the market small businesses and landlords that cannot afford to make up a short term loss, monopolizing even further the housing market, which would, in the long run, result in further increase of housing demand and prices. Rent regulations, which can take various forms of setting limits on rent increases, should be implemented in combination with other policies and financing mechanisms to balance off housing supply and demand.

Next up, we had a comment sent in from Ginster, who thinks the solution to the affordable housing crisis is simple: build more affordable homes. Does Sorcha Edwards from Housing Europe agree?

Finally, we put this comment to Samir Kulenovic, Technical Adviser for Housing and Urban Development at Council of Europe Development Bank (CEB). What would he say?

Building more is not necessarily solution everywhere; the solution is rather to increase the availability of adequate homes. In some places this would require to build more houses; but in other cities may imply to change the incentives and obligations on housebuilders to expand social housing, or to make sure that vacant residential buildings are occupied and available also for lower- and middle-income people and that vacant commercial buildings can be transformed in residential ones.

Building more is not necessarily more. For example, housing policies and strategies that encourage “housing mobility”, economising housing developments such as cohousing, and provision of innovative financial instruments such as social impact bond, can contribute to easy housing crises in a financially and environmentally sustainable way.

Are rent controls the answer to affordable housing? Or governments just build more affordable housing (or open up more land for development so private companies can do so)? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

IMAGE CREDITS: (c) BigStock – REDPIXEL.PL; PORTRAIT CREDITS: Samir Kulenovic & Monica Brezzi (c) CEB
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25 comments Post a commentcomment

What do YOU think?

  1. avatar
    Ivan

    Rent control is just more Socialist claptrap that sounds good but it’s the economics of stupidity.

    • avatar
      Uli

      Ivan better than doing nothing

    • avatar
      Ivan

      Uli Not when it makes the situation worse for poor people it isn’t.

    • avatar
      Josh

      Ivan I can tell you right now there are two countries in the EU without rent control, Ireland and the UK, both have a city in the top ten most expensive rents in Europe according to expatistan.com. the average rent in Dublin is about 5% higher than Paris.

      Additionally, Dublin has a rental crisis where rent is increasing much faster than the price of any other product and the result is that we have more homeless people now than we did in 2008.

    • avatar
      Ivan

      Josh Correct & the socialist answer is to reduce affordable housing even further by putting landlords out of business ?

      Like I said, its economics of stupidity.

  2. avatar
    ironworker

    Europe’s population is shrinking, badly, so why so much concern about housing? Sweeten the “refugees” way to Europe? Making room for the Islamic urban enclaves…

  3. avatar
    Josh

    I think it’s critical we do something proactive. If you want to see the damage a lame duck government can do just look at Dublin.

    Now whether the answer is more social housing, rent control, “empty house tax” (where one has to pay higher property tax on a house with no occupants) we’ve got to do something drastic and fast. People are getting angry about this, they aren’t just going to tolerate a homeless crisis.

    • avatar
      Bernard

      Limiting mass immigration is the only way to do something about it. There’s a limit to how much social housing can be built, especially in cities, where new plots can’t be conjured out of nothing.

    • avatar
      Josh

      Bernard No, for three reasons.

      Firstly Ireland hasn’t even seen that much immigration at all since 2008, since we were at 30% unemployment at one stage. If anything we now have an exodus of young Irish people, many of whom are my friends, leaving for Germany and Scotland because the rent here is too expensive for the work opportunities. Furthermore, Germany has seen thousands of times the rate of immigration that Ireland has, yet Berlin’s rent is still 25% cheaper than Dublin. Countries receiving more immigrants can manage just fine – provided there is a political will to keep rent under control.

      Secondly, none of the immigrants can afford to rent comfortably either. The only non-eu immigrants who live in Dublin in rented accomodation are the highly skilled, 35-55 professionals or students from wealthy backgrounds (and we need them for our tech industry, so they aren’t going anywhere). The remainder live in bedsits or shared rooms, not entire homes or apartments to themselves. We’ve done nothing but cut down on work visas for years for low skilled workers too, to the point where some industries like in home care can’t get enough people into the job.

      Finally, not only does Ireland not have rent control, we’ve built barely any social housing since 2008. Even if we did, people on work visas don’t qualify for social housing.

      I understand there is anxiety caused by immigration, but ultimately I don’t view immigrants as the problem as much as the failure of government to reign in landlords with rent control and more social housing. We could reduce immigration but it won’t do anything to the cost of rent.

    • avatar
      Fred

      Bernard I have been saying that for years but the politically correct twits usually jump all over you shouting racism, not only is uncontrolled immigration contributing to homelessness, we doubt not have the capacity in our schools or healthcare system to cope. Plus we still have 6% unemployment

    • avatar
      Josh

      I did not say the word racism once in my response and I gave you plenty of reasons why immigration isn’t causing our problems.

      6% unemployment is not that bad of a number – we have much higher employment now than we did in 2008 when it was at its worst around 30%, but we also have more homeless people now than we did at the same time in Dublin by over 2,000. The problem isn’t a lack of jobs, it’s a lack of houses.

      Such concerns about immigration, while understandable, don’t help us turn the screws on the people who are really responsible, such as property speculators, developers, politicians and landlords.

    • avatar
      Fred

      Josh Ireland has not seen that much immigration since 2008, have you actually been in Ireland during this time or were you just constantly stoned?? Yes we had a mass exodus of our own who could not find jobs but at the same time we had mass immigration from all over the world. It is easier to get a job here if you are foreign born because the country is somewhat politically correct employers are afraid to hire an Irish person for fear of being called racist. Why do we need the highly skilled foreign workers, we have a skill set base here that we are sending abroad it makes more sense to encourage them to stay.

    • avatar
      Fred

      Josh where did I say that you mentioned racism? That is the standard response from the politically correct twits to anyone who speaks out against open immigration I never said that you personally said it. 6% unemployment is a disgraceful number when you have irish citizens who’s cannot get jobs yet people are flooding into the country and walking straight into jobs. You comparison with Germany when it comes to immigration is comparing apples to oranges Germany is a much larger country so it is able to absorb larger amounts of immigrants. Let’s look at some of the negative effects Germany experiences from immigration such as rapes and terrorist attacks I don’t particularly want to bring that here. How have our emigrants been treated for example in Poland the country that sends us most immigrants.

    • avatar
      Ivan

      Josh You mean turning the screws on the people who actually provide the housing ? Said like a true Socialist comrade.

      Rent control is the housing policy of Socialists and fools.

    • avatar
      Josh

      Ivan If the average consumer product was going up by about 2% a year with inflation, there’s no excuse for one particular sector going up by 10, 12, or 15%. If you woke up tomorrow and read the price of food was going up by 10 or 15% a year there’d be a panic, and homes are no less essential.

      Yes, rent stabilization (fixing rent inflation to the price of other products) is a desperate measure, and yes, it’s only a symptom of a low supply (though we clearly disagree on *why* the supply is so low or how we can fix it), we simply can’t let prices rise unchecked infinitely. The price of rent is going to go up faster than we can build houses to curb it, so if we have to curb it artificially until we can fix the supply problem, that has to be that.

    • avatar
      Ivan

      Josh Why should I pay for your housing ?

  4. avatar
    Bernard

    No, they mess up the market and lead to shortages and waiting lists, as happens with socialism in any other economic field.

  5. avatar
    Tom

    Yes, house is a right not a privilege. We can’t work only for paying the rent and for eat. We aren’t in the 800′. We want rights from eu.

    • avatar
      EU Reform- Proactive

      Tom agh no, not the way YOU mistakenly perceive it- turning it into your “personal entitlement”! Try again!

      Such UN “law” (right) exists since WWII. Most States copied it over. Since neither the EU nor the UN are sovereign states- nobody will give you a “free house” in the EU- except some token you may receive- if you qualify- from your own country!

      Sorry, but that is in many aspects also a d..b anno “800” comment- equally backward when the vassals where rejoicing in the legalization of their bondage to THEIR owners= Aristocracy & Landlords- who in turn made that law! Where have you been?

  6. avatar
    Janis

    When I walk through Riga and see bunch of abandoned houses, not offered for rent and look at rental prices on yellow pages, seems really weird. How come that it’s so difficult to find some affordable housing which would not take 60% of my salary. There should be some regulation I think, like penalty or super high taxes for empty houses. If more houses will be offered on market, price should drop down. But I guess it would work only in post soviet Europe with negative migration saldo. Contries like Sweden, Belgium and Denmark might get over populated due to high numbers of immigrants and people from other EU countries, and seems that they need just simply more affordable houses, maybe municipal ones.

  7. avatar
    catherine benning

    Are rent controls the answer to affordable housing?

    The housing problem, rents and the cost of dwellings to purchase, are entirely due to government policy. And they know it. It is a deliberate move to increase massive income in that market for investors. Economics is a complicated business and the increase in population, which is massive, by determined government intervention via various peculiar policy along with determined migration, is set up to do several money making ponzi schemes. It is foremost to boost the income and portfolios of the wealthy. Their paper worth goes up at an astonishing rate as they play the boom/bust game with our lives and our pennies repetitively.

    1) Mass migration lowers corporate and business outlay on wages bills more than any other cut they can make. We earn less now than 25 to 30 years ago. And that is directly as a result of government policy on open door immigration. No matter which party you elect this remains the status quo. This is why they are unhappy at what they call ‘populism.’ It may just be the end of them.

    https://www.youtube.com/watch?v=CQcCf8CLtsY

    See how they use terms felt acceptable for public ears. Let us take a short very simple look at the increase in work force over the last couple of decades. Women, who used to stay home in their millions, to take care of their children, at least until school age, is now frowned upon. They are sneered at as the useless eater. This alone has lead to a huge growth in job seekers. The result of this tactic is an enormous rise in single mothers, thereby adding to the low wage work force. Add the millions of legal migrants to that list and you have more than doubled the low pay work force once again. To make matters worse, illegal workers, who get paid under the table, some for simply a bed and food create a frenzy for them by employers. Especially small business food sellers. And make no mistake, government is well aware of these facts and have continued to promote this ‘ideal’. for a very long time. Forget separate party manifestos on change, take a close look and see just how much ‘change’ has been a reality. It has worsened not relieved chaos, no matter which government we have put up to vote for, they do nothing and doesn’t want to. They are globalist puppets. And they give the elite the circumstances they want to increase their holdings. Governments following global policies are creators of this complete betrayal of our system and our civilisation.

    2) This globalist policy increases the need for housing in the West dramatically, thereby creating substantial money making, low tax income, for those who can invest on a massive scale. At the same time as importing millions from the rest of the planet, government reduced or ended entirely, the means to social housing, except for the immigrant. This created a dire need for more housing at a rate not seen in the West since WWII. Globalists decided this was the way to reduce the expectations of the indigenous population and create a hysterical demand by that population to eliminate any social care as there was too much to handle. This covers housing, benefits, food and education. Again, easier to obtain by being homeless immigrants who are working for nothing, than for the indigenous already in situ. Being supported socially by the working tax payer stimulates resentment by that tax payer as they watch their own families disintegrate. Note, corporations and the wealthy pay far less a percentage of tax than the working poor or middle class. Yet, by the same token, receive far more tax payer hand outs than do those poor. (Don’t believe it? The biggest hand out of tax payers cash went to bale out banks and hedge funds, etc in the 2008 crash than at any other time in history except war) So it is social benefits for the wealthy, whilst the poor go to food banks. In essence the poor find, although the low paid pay the highest percentage of tax, they gain the least from their financial input to the public purse. Social bail outs are for the rich not those who foot the bill for it.

    3) Poverty, therefore, is a big earner for government spendthrifts. Foreign Aid goes to despots, not to their poor. Foreign Aid assist countries who use it on a space race. Yes, for example, our charity donations go toward creating rockets for India. At the same time, our tax payers, who are the poorest pay the most of it. Space exploration in so called third world countries, are a necessity we are told. Whilst we are required to starve our own children and elderly.

    Check out what our tax payers money is spent on. It is an eye opener to all of us who vote for these creeps repeatedly. After they spin some fairy tale we suck up like lollipops.

    Here is a soupçon!

    https://www.youtube.com/watch?v=00UFYU_Gr7w

    Additionally they spend our money on repulsive vanity.

    https://www.telegraph.co.uk/news/politics/9049464/The-obscene-profligacy-of-the-British-government-and-the-EU-with-your-money.html

    https://www.theguardian.com/commentisfree/2014/jun/28/royal-family-value-for-money-not-worth-tuppence

    The list is endless but, the gist is easy to follow.

    Do you really believe rent control will put any kind of halt to this utter theft toward the people of this continent? And if you do, put it up here so we all can take it on board and calm the fire in our breasts.

  8. avatar
    EU Reform- Proactive

    NO! Rent control- “per se”- should not be or become even necessary in the EU!

    Governments have a duty to satisfy & conform to the already laid down and agreed social Basic Universal Human Rights- to food, clothing, “shelter” & health- incorporated in most sovereign national Constitutions. Why not check if your government fulfills that pledge of care? Implementation is up to them.

    That pledge should stop, guide & instruct Government not to misuse the combined power of destructive capitalism, corporatism and corruption (a relative of “fascism”) but provide a safety net for the “deserving” few & genuinely disadvantaged. Polices between rich (less important) or poorer (more so) Nations should differ.

    Luxembourg- being very rich- could afford one easily- but probably does not need a safety net. Bulgaria being poor need a huge one. Look how China uplifted ~600mio poor- despite their poor Human Rights record. Generosity or wisdom?

    Those benefits should be the fruits from a civilized social beneficial free market capitalism. Never mind if HR rules are written on paper like in the EU or just implemented like in China!

    To vilify & condemn such social equalizer between the very rich & very poor- is neither fair nor appropriate!

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