The city of Berlin just moved to protect 1.5 million tenants by freezing most rents for five years. The Netherlands is cutting back on sudden reno-victions by making sure 70 per cent of an apartment building’s tenants agree before landlords makes improvements.
In Canada, it’s British Columbia that arguably has the most rigorous housing restrictions, with a 20 per centforeign-buyers taxand a speculation-and-vacancy tax. But such measures are minor compared to the astonishing rules concocted by other public officials to deflate housing bubbles and soften rent shocks.
Asian countries are much less open than Western nations to allowing foreign nationals to affect their property values by investing in their land. And many European countries have hard caps on rents, as well as direct financial top-ups to tenants paying more than 30 per cent of their income for housing.
There seems no limit to legislators’ housing creativity.
Many of the planet’s desirable cities are being hit by housing pressures similar to those squeezing Vancouver, Victoria and Toronto. Faced with skyrocketing prices and rents, often combined with stagnant local wages, governments across the political spectrum realize they’re called to devise a range of policies to calm prices and guard vulnerable tenants.
Such regulations and taxes can counter the factors driving up prices. Soaring valuations are caused by a sharp global rise in the number of millionaires, increasingly convenient flights from Asia to the West, record low interest rates and urban infrastructure megaprojects, such as Vancouver’s proposed subway to UBC.
Developers and their often-close political allies welcome the economic and population growth — and customarily claim the only way to create more reasonably priced housing (and hike their profits) is to increase density and reduce so-called red tape. But many economists say it’s impossible to build one’s way to affordability.
Rather counter-intuitively, building more houses is not the right prescription. House prices won’t fall until the tide of cash flowing into the market abates. … The best way to do this is through the tax system. Without stopping money funnelling into expensive areas, the market will simply absorb it and prices will keep rising.