Banning investor from buying up homes could be counterproductive: OECD

Banning investors from buying up homes and selling them again would not counteract the imbalanced growth in the Dutch housing market, the Organization for Economic Cooperation and Development (OECD) stated. The measure intended to curb the housing crisis in the Netherlands could even backfire, the OECD stated in their extensive report on the Dutch economy.

Due to the tight housing market, few homes or properties go on sale. Large investors are often able to offer more money than private buyers. Many cities want to designate areas where an investor ban would be applied in order to improve the position of non-commercial buyers, including first-time buyers.

Rotterdam, Eindhoven, The Hague and Haarlem are expected to be the first major Dutch cities to ban investors from buying up rental homes in the near future. The four cities could ban investors from snatching up homes in certain neighborhoods by early next year.

But according to the OECD, such a measure possesses numerous disadvantages. For those who depend on renting a home on the already tight liberalized housing market, the measure would be less effective. Those tenants are likely to have fewer options if investors are barred.

At the same time, home prices and rens in the Netherlands have been on the rise for quite some time. As a result, many people have great difficulty in obtaining a house. A bill that gives municipalities more options to intervene in their local housing market has already been passed by the Tweede Kamer, the lower house of Parliament, but is yet to be approved by the Senate.

Like the Dutch Central Bank (DNB), the OECD also believes that the tax rules in the Netherlands are now mainly beneficial for home owners. In order to counteract the imbalance, the tax system should be changed so that there is more room for investment on the housing market.

OECD also suggested that the number of people eligible for social housing should be limited.