The value gap between rented houses and owner_occupied houses is well known in the literature. It is identified as a factor that may give rise to a gentrification process (Hamnett & Randolph, 1988). The increase of the owner_occupied sector at the expense of the rented sector is also partly attributed to the value gap. In the Netherlands the value gap between the owner_occupied and the rented sector is immense. This is especially the case with the rented houses owned by the housing associations with a share of 1/3 of the total housing stock. The vacant possession value of these houses is on an average Ä 151.000; the reported tenanted value is no more than Ä 33.000. Important factors which are responsible for this gap are on the one hand the fiscal subsidies in the owner_occupied sector and on the other hand rent control and the policy of the housing association characterized by a low rent level and high maintenance costs. In the paper we will present a model that analyses the value gap for the houses of the housing associations. By using the well known concept of the user costs and using a market equilibrium as a reference the model quantifies the influence of the factors which cause the value gap. This is done for the Netherlands in total and for every of the 450 housing associations separately. Also regional differences will be presented. In the paper we also explore why the value gap is a structural phenomenon in the Netherlands and why it is an important factor contributing to the malfunctioning of the housing market. This will give an interesting expansion of the theory on the value gap. An analysis of the consequences of the value gap will be presented in an other paper (Schilder and Conijn, 2009).