In this research paper published in the Journal of Housing Economics, Konstantin A. Kholodilin from DIW Berlin examines many empirical studies on the effects of rent control and identifies a wide range of effects covered in the empirical literature. For the most relevant effects, their direction and degree of consensus of researchers are analysed.
The paper, issued as the EU-funded HouseInc project starts early 2024, is a teaser to the work DIW Berlin will perform in the project. The results of this paper were presented on June 22, 2023, at the 3rd Workshop on Rent Control in Berlin (Germany) and on September 28, 2023, at the 9th International MACroeconomics Workshop Regional and Global Spillovers in a World of High Debt and Inflation in Rennes (France).
Paper abstract
Rent control is a highly debated social policy that has been omnipresent since World War I. Since the 2010s, it is experiencing a true renaissance, for many cities and countries facing chronic housing shortages are desperately looking for solutions, directing their attention to controling housing rents and other restrictive policies. Is rent control useful or does it create more damage than utility? To answer this question, we need to identify the effects of rent control. This study reviews a large empirical literature investigating the impact of rent controls on various socioeconomic and demographic aspects. Rent controls appear to be quite effective in terms of slowing the growth of rents paid for dwellings subject to control. However, this policy also leads to a wide range of adverse effects affecting the whole society.
How does this fit into the work DIW Berlin and project partners will deliver in HouseInc?
From a political housing perspective, DIW Berlin will assess and summarise the housing policies in the HouseInc selected EU Member States. This will include tenant-oriented tools such as rent control and protection of tenants, homeowner-oriented tools such as mortgage interest deduction and imputed rent tax, and sustainability-oriented tools such as land-use regulations and building codes. DIW will conduct a comprehensive meta-analysis of empirical studies investigating the effects of individual housing policy instruments to predict potential outcomes of different policy combinations in terms of affordability of housing, quantity and quality of housing, labour market outcomes, and sustainability of housing. A summary of housing policies applied in the EU States will be done to compare governmental housing regulations. Stay tuned, first results on this work will be released early 2025!
Citation
Konstantin A. Kholodilin, Rent control effects through the lens of empirical research: An almost complete review of the literature, Journal of Housing Economics, Volume 63, 2024, 101983, ISSN 1051-1377, https://doi.org/10.1016/j.jhe.2024.101983. (https://www.sciencedirect.com/science/article/pii/S1051137724000020)
Keywords: Rent control; Meta-analysis; Housing markets; Construction; Quality
https://authors.elsevier.com/sd/article/S1051-1377(24)00002-0
