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The Energy Efficiency Gap in the Rental Housing Market: It Takes Both Sides to Build a Bridge

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  • Xavier Lambin, Joachim Schleich, and Corinne Faure

Abstract

We revisit the issue of the energy efficiency (EE) gap by explicitly acknowledging the two-sided nature of the rental housing market and two-sided asymmetries of information between tenants and landlords. Employing a theoretical matching model, we show that Energy Performance Certificates (EPCs) that signal a dwellings energy performance induce optimal EE investments by landlords only if tenants pay their energy expenditures in full. When landlords pay part of the energy expenditures, they seek tenants who will conserve energy. Our model shows that asymmetry of information over tenant characteristics results in suboptimally low investments in EE. This may even render EPCs counterproductive. As a remedy, we show that tenant-side signaling needs to be rolled out jointly with EPCs and may even be sufficient when contracts include energy expenditures. Data from an original survey provides support for these insights and suggests that information on the tenants side contributes to more EE investment.

Suggested Citation

  • Xavier Lambin, Joachim Schleich, and Corinne Faure, 2023. "The Energy Efficiency Gap in the Rental Housing Market: It Takes Both Sides to Build a Bridge," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    • Handle: RePEc:aen:journl:ej44-1-lambin
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    Cited by:

    1. Chaudhuri, Kausik & Huaccha, Gissell, 2023. "Who bears the energy cost? Local income deprivation and the household energy efficiency gap," Energy Economics, Elsevier, vol. 127(PA).
    2. Fanghella, Valeria & Guetlein, Marie-Charlotte & Schleich, Joachim & Sebi, Carine, 2023. "Preferences on financing mechanisms for thermal retrofit measures in multi-owner buildings: A discrete choice experiment with landlords and owner-occupiers in France," Resource and Energy Economics, Elsevier, vol. 74(C).

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    JEL classification:

    • F0 - International Economics - - General

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