France’s Rent Crisis Could Help Solve Its Jobs Emergency

Cécile Duflot, Minister for Housing and Territorial Equality

Wikimedia Commons

France’s new housing minister is making her mark quickly with the imposition of “emergency” rent control measures and curbs on evictions. I hope the stated temporary nature of the rules reflects a recognition that this sort of strategy doesn’t work to cope with the long-term question of housing availability, though one always has to worry that temporary measures may become permanent.

What’s really noteworthy here, however, is the nature of the circumstances in which this emergency arises.

The most reasonable time for rent control is when you have some policy reason to want to prevent people from becoming employed in the residential construction sector. During a war, for example, you might deliberately curtail civilian building to free up resources for strategic projects. But France is not at war, and François Hollande’s stated top priority is fighting joblessness and promoting economic growth. In that case high rents—in other words, a high level of demand for houses relative to the existing stock—should be part of the solution. Since a construction boom would be a welcome driver of employment, the question for France is why don’t high rates lead to an adequate level of new building? In American jurisdictions undersupplied with housing, the answer usually turns out to be rules against building multi-family homes, rules requiring provision of huge numbers of parking spaces, and sometimes simply blanket rules saying that the “character” of existing neighborhoods can’t change.

The details of the French situation are doubtless different, but basically similar barriers exist all around the world. A country facing high unemployment and rising rents should be trying to see what’s blocking new construction projects and removing the obstacles.