Day by day rent controls are becoming popular in European nations. Rent controls are government policies that provide housing to the vulnerable group of the population at affordable prices. At the time of sovereign debt crises in European nations, the interest rates were lower from Central banks which provoked people to buy property as their first home or an investment to let. This demand pushed up the prices given the limited housing stock on the market. Many of the landlords have chosen to make their houses available for short stays. This further accelerated rental prices.
According to Eurostat, the rates have risen by 15.3% from 2010 till the first quarter of 2021. A significant downside is observed in rent controls. Investors move towards nations that provide higher returns. Barbar Steenbergen, a member of the International Union of Tenants & former lawmaker of the German region of Cologne highlights that rent controls are very important for low & middle-income families.
While rents are increasing exponentially there is no rise in salaries. The challenge today is that investors are interested in luxury buildings rather than considering their affordability & social housing. According to the European Central Bank, there is a substantial decrease in housing completions owing to lack of building permits & labour shortages.