The original purpose of the Rotterdam Act - officially known as the Dutch Act on Extraordinary Measures for Urban Problems - was to improve the quality of life in vulnerable neighbourhoods, particularly those areas that had an excessive concentration of disadvantaged households and struggled with crime. The law saw the light of day in 2005 and was controversial from the start because it could encourage discrimination. It gave local politicians a legal instrument to bar the influx of certain population groups with a too low income (unemployed, people on welfare) or with a criminal past into social housing in designated neighbourhoods and to give preference to housing seekers with a job.
For individuals who want to live in social housing in designated neighbourhoods, the new law means they must apply for a housing permit. This screens the individual and looks at whether the applicant has a continuous living period of six months or longer in the area behind their name, has an earned income above the social welfare standard, and has not been eligible with the justice system. If any of these conditions are not met, the municipality has the right to deny the applicant access to social housing in these neighbourhoods.
"The idea behind this is that if you exclude unemployed people from the neighbourhood and attract people with higher incomes, the composition of the neighbourhood would become more diverse and therefore more attractive," explains Hans Koster. "But using unique data from the Central Bureau of Statistics, we show that this social mixing has hardly improved. The new residents who did receive a housing permit hardly differed demographically and economically from the current residents."
Furthermore, both urban economists indicate that another goal of the law - making urban spaces livable - has not produced the desired effect either. Because the Rotterdam Law forces municipalities to communicate what the most unsafe and disadvantaged neighbourhoods are, it was suddenly clear to everyone what the "worst" neighbourhoods in a city were. By looking at local differences in housing prices, Koster and van Ommeren show that prices of houses in the neighbourhoods in which the Rotterdam Law was applied decreased compared to prices of houses in the neighbourhood, indicating a so-called stigma effect: people are willing to pay less for a house in a neighbourhood known to everyone as a bad area.
All in all, the effects of the Rotterdam Law for both residents of social housing and owner-occupied homes are more negative than positive. If it were up to Koster, he would immediately stop this law, because it creates unnecessary bureaucracy and does not produce the desired results.
Read more about the study Neighbourhoods won't be improved by banning the unemployed.