(Bloomberg) -- Amsterdam is the latest European city to try to get a grip on its buy-to-let housing market as it seeks to stop a wave of landlords from capitalizing on booming property prices.
Dutch officials proposed an outright ban on newly built homes being rented out on Thursday, to free up supply for the city’s more than 850,000 residents. It’s one of a number of steps designed to cool demand after rents climbed almost 40 percent in 12 years and the price to buy property in the capital rose to a record.
The Amsterdam proposal underscores the pressure that European politicians find themselves under as sky-high property values price even middle-class citizens out of the housing market. Only this month, Spain’s Socialist government used an emergency decree to limit rent increases.
Amsterdam “is looking for a way to a better market situation,’’ said Jaap van der Bijl, chief executive officer of Altera Vastgoed, which invests more than 2.3 billion euros ($2.6 billion) in real estate. However,“it’s still unclear how they will check and uphold a ban” because it will be difficult to differentiate between landlords and those who want to live in a property, he said.
The city’s real estate market is already under pressure. House prices in Amsterdam surged 8 percent year-on-year to a record 448,000 euros as of end-2018, data from realtors association NVM showed in January. Private-sector rents rose 40 percent between 2005 and 2017 to an average 1,160 euros per month, according to official figures.
And the outlook could be even bleaker for locals as the city braces for an influx of new residents relocating as a result of the U.K.’s withdrawal from the European Union.
Read More: Amsterdam Socialists Seek to Keep Homes Affordable in Hot Market
Politicians across Europe are homing in on voter discontent about soaring property prices. With populism on the rise in much of the continent, it’s one way governments can show they’re on the side of ordinary people at a time when globalization is contributing to stagnant wage growth and as economies slow.
Local residents have petitioned European governments to boost oversight of short-term rentals and to increase regulation of Airbnb Inc. and similar services. Activists in Dublin demanded an end to Airbnb’s service in the city last year. And in Berlin, anyone who rents out more than half of their apartment has to get a permit.
Amsterdam’s local government plans to present concrete proposals for the rental ban at the end of this year, according to a statement from the municipality. That ban could be included in conditions of leasehold agreements, meaning it would apply to subsequent buyers, according to the statement. The proposed ban follows plans for a rent cap, and as of January, Amsterdam limited short-term rentals to 30 nights per year.
The proposed rental ban is “very ill-judged,” said Laurens van de Noort, general director of Vastgoed Belang, an association for Dutch retail investors in the property market. The city has a very low share of private rental homes compared with the rest of the Netherlands, and this proposal would only make the disparity worse, he said.
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