Private Renting in Europe: Dissimilar Trajectories, Similar Tensions?

This paper examines how rent regulation has affected the role of private renting across a range of European countries and how regulatory frameworks are currently developing. It clarifies the three types of regulation that have been experienced since the war and their different impact on landlord and tenant incentives. It shows that traditional forms of regulation that hold rents below market levels into the longer term lead to dysfunctional rental sectors. However, ‘third generation’ rent control systems, where initial rents are set by the market but with long term tenancies and predictable rent increases, can help reduce market failures. It also shows that the extent of regulation is not closely related to changes in the size of the sector, mainly because of the impact of other policies.

The paper examines the systems that operate in a number of European countries – notably Germany, the Netherlands and France. It also discusses how, in many countries, governments are responding to current market pressures by introducing stronger controls and the possible impacts of such controls.