Tenancy rent control and credible commitment in maintenance

Arnott, Richard; Shevyakhova, Elizaveta

doi:10.1016/j.regsciurbeco.2013.08.003

Cited by 26 publications

(16 citation statements)

References 24 publications

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“…If the contract does not stipulate exactly when these renovations shall be made, there is a clear incentive in the Swedish system for the property owner to postpone maintenance, beyond the point in time where it would have been carried out on the competitive market. This is very similar to the situation analyzed by Arnott & Shevyakhova (2014) where the landlord cannot credibly commit to a certain maintenance policy. Notice however that in the Swedish system it is generally not possible to make maintenance, and increase the rent, when there is a new tenant, so this second type of maintenance could be postponed indefinitely in the Swedish system.…”

Section: Effects On Rents and Maintenance Of The Contract Structuresupporting

confidence: 78%

“…In a recent study Arnott & Shevyakhova (2014) focus on "tenancy rent control" where the rent is controlled during a tenancy, but where the rent can be set at market level when an apartment is vacant. They show that if the landlord can commit to a certain level of maintenance, then this rent regulation system has no effect on maintenance.…”

Section: Determinants Of Maintenance In a Competitive Marketmentioning

confidence: 99%

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The Effect of Rent Regulations and Contract Structure on Renovation: A Theoretical Analysis of the Swedish System

Lind

2015

Housing, Theory and Society

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The standard view is that rent regulation leads to reduced maintenance as the landlord will be able to find tenants at the regulated rent even if the level of maintenance is low. In this article it is shown that the rent regulation system in Sweden interacts with a contract structure where the rent is allowed to increase only if the standard of the apartment is raised compared to when the apartment was new. Ordinary maintenance is included in the rent, and the rent is therefore not allowed to increase when such maintenance is carried out. It is shown that when there is a housing shortage this system creates economic incentives for increasing the standard of the apartment even if this reduces total welfare. The result can be that quality is increased more than in a market system, and that it can increase gentrification compared to such a system. Policy proposals are also presented.

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Section: Effects On Rents and Maintenance Of The Contract Structuresupporting

confidence: 78%

Section: Determinants Of Maintenance In a Competitive Marketmentioning

confidence: 99%

The Effect of Rent Regulations and Contract Structure on Renovation: A Theoretical Analysis of the Swedish System

Lind

2015

Housing, Theory and Society

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“…Most studies on the effects of rent control have, however, focused on the impact of rent controls on the earning potential of private landlords and on their decisions on maintenance (Arnott and Shevyakhova 2014; Lind 2015), investments and the sale of rental housing (e.g., Andrews et al 2011; Autor et al 2012; Block and Olsen 1981). Enström Öst et al (2014) additionally show how rent control affects the socio-spatial distribution of housing.…”

Section: Rent Control and Price Settingmentioning

confidence: 99%

Rent increase strategies and distributive justice: the socio-spatial effects of rent control policy in Amsterdam

Jonkman

Janssen-Jansen

Schilder

2017

J Hous and the Built Environ

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Rent controls and rent setting regulation in different contexts incorporate and balance different aims, in particular when securing affordability and the effective distribution of scarce housing by incorporating market mechanisms. As rent policy is frequently discussed in terms of affordability or market functioning in broad terms, small-scale distributive socio-spatial effects are often not regarded. In this paper, three strategies under the new rent sum policy are compared against the former policy and practice for Amsterdam, the Netherlands, to observe the effects of distributive justice. The new rent policy partly decentralizes rent increase decisions from the national level to local authorities and housing associations. Using microdata on all social housing units and their tenants’ distributive justice, outcomes under the former policy and practice are observed for a 6-year period (2008–2014) and the effects of three different rent increase strategies under the new rent sum policy are forecasted for the same period, combining an ex ante and an ex post evaluation. The possibilities for housing associations to vary rent increases for different groups of tenants in order to improve distributive justice outcomes are explored. Results show that all three possible strategies decrease the observed affordability gap between new and long-term tenants. Valuing the distributions of these strategies by applying two different standards for distributive justice shows the rent sum policy may only result in modest improvements.

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“…Security of tenure is also often found to be a secondary objective (Haffner et al 2008). The research on the costs and benefits of rent control measures is extensive, with considerable focus placed on issues such as investment and housing quality (Sims 2007, Arnott & Shevyakhova 2014, community composition (Sims 2011), the impact on unemployment duration (Svarer et al 2005), tenancy length (Munch & Svarer 2002) and homelessness (Early & Olsen 1998). Haffner et al (2008) also explored the degree to which the balance of tenant and landlord rights matter for the efficacy of regulations.…”

Section: Introductionmentioning

confidence: 99%

Price regulation, inflation, and nominal rigidity in housing rents

O’Toole

Martinez-Cillero

Ahrens

2021

Journal of Housing Economics

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In this paper, we explore the impact of a housing rent inflation cap of 4 per cent on price changes for tenancy contracts. We assess the implications of the regulations on the share of the market experiencing: 1) a price decline; 2) unchanged rents (nominal rigidity); 3) a positive growth rate below the cap; 4) the maximum allowable growth; and 5) growth above the cap. Our identification strategy uses a multinomial logit difference-in-difference approach applied to a novel micro panel dataset at the property level in Ireland. We find the overall inflation rate fell by 3 percentage points following the regulations, driven by a reduction in the share of individual contracts pricing above the regulatory maximum. We find an increase in the likelihood of nominal rigidity at the expense of high-growth rates. However, we also find a higher probability of small increases, at or below the regulatory level, relative to nominal rigidity after the regulations which is consistent with landlords trying to maintain real returns as price resets are not allowed between tenancies. Heterogeneous effects by landlord type and starting rent levels are evident.

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Tenancy rent control and credible commitment in maintenance

Cited by 26 publications

References 24 publications

The Effect of Rent Regulations and Contract Structure on Renovation: A Theoretical Analysis of the Swedish System

The Effect of Rent Regulations and Contract Structure on Renovation: A Theoretical Analysis of the Swedish System

Rent increase strategies and distributive justice: the socio-spatial effects of rent control policy in Amsterdam

Price regulation, inflation, and nominal rigidity in housing rents

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