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Why Do Landlords Include Utilities in Rent? Evidence from the 2000 Housing Discrimination Study (HDS) and the 2002 American Housing Survey (AHS)

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  • Choi, Seok Joon
  • Kim, Sangsin
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    Abstract

    This study assesses the decision to include utilities in the rent and the effect of this decision on rents. We utilize individual house-level data from the 2000 Housing Discrimination Study (HDS) and 2002 American Housing Survey (AHS), and determine that the cost of meter installation is not the only reason that utility costs are included in rent. We find evidence that landlords include utilities in the rent to attract more customers. Additionally, our findings demonstrate that utility inclusion behavior differs significantly between old and new building owners. For the hedonic rent estimation, we find that the decision to include the cost of utilities in the rent raises rent.

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    File URL: http://www.sciencedirect.com/science/article/pii/S105113771200006X
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Housing Economics.

    Volume (Year): 21 (2012)
    Issue (Month): 1 ()
    Pages: 28-40

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    Handle: RePEc:eee:jhouse:v:21:y:2012:i:1:p:28-40

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    Web page: http://www.elsevier.com/locate/inca/622881

    Related research

    Keywords: H39; R22; R38; R20; J71; Landlord; Rental agent; Utility; Metering cost; Hedonic Price Model; Rent;

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    1. Arik Levinson, 2001. "Energy Use By Apartment Tenants When Landlords Pay For Utilities," Working Papers gueconwpa~01-01-09, Georgetown University, Department of Economics.
    2. Friedman, David, 1987. "Cold Houses in Warm Climates and Vice Versa: A Paradox of Rational Heating," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 1089-97, October.
    3. Jan Ondrich & Stephen Ross & John Yinger, 2003. "Now You See It, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 854-873, November.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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