Buy-to-Live vs. Buy-to-Let: Real Estate Investors, Property Prices, and Neighborhoods

Abstract

How does property ownership type affect house prices and neighborhoods? We investigate a Dutch legal ban on buy-to-let investments that exploits within-city and between-city variation in its coverage. The ban effectively removes investor purchases from the market, increasing owner-occupancy. We find the ban does not reduce house prices and sales in affected neighborhoods and even weakly increases prices. We argue the local price impact of the ban is ambiguous as the reduction in investor demand is offset by neighborhood gentrification. Properties sold post-ban have fewer, older and richer occupants that are more likely to be Dutch-born and have moved-in over short-distances. This is effect entirely driven by the fact that investor-purchased properties were catering to more mobile, lower-income residents, whose housing opportunities were ultimately reduced by the ban.

Presented by Matthijs Korevaar.