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The Residency Discount for Rents in Germany and the Tenancy Law Reform Act 2001: Evidence from Quantile Regressions

Author

Listed:
  • Fitzenberger Bernd

    (Humboldt-University Berlin, IZA, CESifo, IFS, ROA, ZEW, Berlin, Germany)

  • Fuchs Benjamin

    (University of Hohenheim, Stuttgart, Germany)

Abstract

Most countries show a residency discount in rents for sitting tenants. In the wake of strong rent increases and housing shortages, Germany implemented a reform in 2001 to curtail rent increases. Based on linked housing-tenant data for Germany, this paper estimates panel OLS and quantile regressions of rents within tenancies. The results show that rents deflated by the CPI increase strongly from 1984 until the reform in 2001, and there is a reversal in the trend afterwards. Before the reform, there is a significant residence discount which decreases in absolute value with tenure. The reform reduces rents, in particular for expensive apartments and for new leases. There is no residency discount after the reform.

Suggested Citation

  • Fitzenberger Bernd & Fuchs Benjamin, 2017. "The Residency Discount for Rents in Germany and the Tenancy Law Reform Act 2001: Evidence from Quantile Regressions," German Economic Review, De Gruyter, vol. 18(2), pages 212-236, May.
    • Handle: RePEc:bpj:germec:v:18:y:2017:i:2:p:212-236
    DOI: 10.1111/geer.12093
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    Cited by:

    1. Lea Eilers & Alfredo R. Paloyo & Colin Vance, 2021. "Rental prices in Germany: A comparison between migrants and natives," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(4), pages 434-466, September.
    2. Konstantin A. Kholodilin, 2022. "Rent Control Effects through the Lens of Empirical Research: An almost Complete Review of the Literature," Discussion Papers of DIW Berlin 2026, DIW Berlin, German Institute for Economic Research.

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