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The Regulation of Residential Tenancy Markets in Post-War Western Europe: An Economic Analysis

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  • Juan S. Mora-Sanguinetti

Abstract

This paper provides an economic analysis of the post-war regulation of European tenancy markets. Two representative types of market regulation are analyzed: the introduction of compulsory duration clauses in tenancy contracts (as a means of protecting the tenant against eviction); and rent control policies. First, the study describes and analyzes the recent history of such regulations in Spain, Italy, Finland and the UK, in order to draw some general conclusions about the evolution of European institutions in recent decades. Their effects are then explored by adapting a theoretical model of tenancy markets. The results show that both rent control and compulsory duration clauses potentially entail negative effects for European tenancy markets as they may drive some participants out of the market. These effects are consistent with the trends observed during the latter half of the 20th century in several European countries.

Suggested Citation

  • Juan S. Mora-Sanguinetti, 2011. "The Regulation of Residential Tenancy Markets in Post-War Western Europe: An Economic Analysis," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(1), pages 47-75, June.
    • Handle: RePEc:liu:liucej:v:8:y:2011:i:1:p:47-75
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    References listed on IDEAS

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    6. Subal Kumbhakar & Ana Lozano-Vivas, 2004. "Does deregulation make markets more competitive? Evidence of mark-ups in Spanish savings banks," Applied Financial Economics, Taylor & Francis Journals, vol. 14(7), pages 507-515.
    7. Rosen, Harvey S & Rosen, Kenneth T & Holtz-Eakin, Douglas, 1984. "Housing Tenure, Uncertainty, and Taxation," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 405-416, August.
    8. Pena, Daniel & Ruiz-Castillo, Javier, 1984. "Distributional aspects of public rental housing and rent control policies in Spain," Journal of Urban Economics, Elsevier, vol. 15(3), pages 350-370, May.
    9. Henderson, J Vernon & Ioannides, Yannis M, 1983. "A Model of Housing Tenure Choice," American Economic Review, American Economic Association, vol. 73(1), pages 98-113, March.
    10. Early, Dirk W., 2000. "Rent Control, Rental Housing Supply, and the Distribution of Tenant Benefits," Journal of Urban Economics, Elsevier, vol. 48(2), pages 185-204, September.
    11. Matteo Iacoviello & Raoul Minetti, 2003. "Financial Liberalization And The Sensitivity Of House Prices To Monetary Policy: Theory And Evidence," Manchester School, University of Manchester, vol. 71(1), pages 20-34, January.
    12. Olsen, Edgar O, 1972. "An Econometric Analysis of Rent Control," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1081-1100, Nov.-Dec..
    13. Munch, Jakob Roland & Svarer, Michael, 2002. "Rent control and tenancy duration," Journal of Urban Economics, Elsevier, vol. 52(3), pages 542-560, November.
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    15. Sims, David P., 2007. "Out of control: What can we learn from the end of Massachusetts rent control?," Journal of Urban Economics, Elsevier, vol. 61(1), pages 129-151, January.
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    Cited by:

    1. Jordi Brandts & Isabel Busom & Cristina Lopez-Mayan & Judith Panadés, 2022. "“Pictures are worth many words: Effectiveness of visual communication in dispelling the rent–control misconception”," AQR Working Papers 202202, University of Barcelona, Regional Quantitative Analysis Group, revised Feb 2022.
    2. Benito Arruñada, 2021. "La seguridad jurídica en España. Documento de discusión (versión revisada y comentada)," Studies on the Spanish Economy eee2021-18, FEDEA.
    3. Jordi Brandts & Isabel Busom & Cristina Lopez-Mayan & Judith Panadés, 2022. "Images Say More Than Just Words: Effectiveness of Visual and Text Communication in Dispelling the Rent–Control Misconception," Working Papers 1322, Barcelona School of Economics.
    4. Brandts, Jordi & Busom, Isabel & Lopez-Mayan, Cristina & Panadés, Judith, 2022. "Dispelling misconceptions about economics," Journal of Economic Psychology, Elsevier, vol. 88(C).
    5. Benito Arruñada, 2020. "La seguridad jurídica en España," Studies on the Spanish Economy eee2020-26, FEDEA.
    6. Juan Mora-Sanguinetti, 2012. "Is judicial inefficacy increasing the weight of the house property market in Spain? Evidence at the local level," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(3), pages 339-365, September.
    7. Seshimo, Hiroyuki, 2014. "Adverse selection versus hold up: Tenure choice, tenancy protection and equilibrium in housing markets," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 39-55.

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    More about this item

    Keywords

    Rent control; Tenancy contracts; Compulsory terms;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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