Investment incentives of rent controls and gentrification: Evidence from German micro data

Arbeitspapier

We empirically document that the effectiveness of the German rent control introduced in 2015 in achieving rental housing affordability is limited. Exploring the reasons for this limited effectiveness we focus on the impact of the rent control on the yield on rental housing investments proxied by rent-price ratios which we derive by matching micro-level quotes on similar objects offered for rent and for sale. Exploiting the temporal, regional, and objectspecific variation generated by the design of the rent control we identify a causal negative effect of the rent control on the yield of rental objects subject to the regulation. Further, we zoom into the spillovers across regulated objects and objects in the affected markets that were exempt from the regulation and find rising yields for the exempted objects, suggesting that the regulation contributed to gentrification via a shift of rental housing supply away from the regulated segment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 122

Classification and Topics

• Classification: Wirtschaft ; Production Analysis and Firm Location: Government Policy ; Housing Supply and Markets ; Studies of Particular Policy Episodes ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics ; General Regional Economics (includes Regional Data)
• Subject: rent control ; micro data ; rent-price ratio ; housing affordability ; housing supply

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Baye, Vera ; Dinger, Valeriya
• Event: Veröffentlichung
• (who): Osnabrück University, Institute of Empirical Economic Research
• (where): Osnabrück
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/274115
• Last update: 10.03.2025, 11:42 AM CET