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The landlord-tenant problem and energy efficiency in the residential rental market

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  • Petrov, Ivan
  • Ryan, Lisa

Abstract

The aim of this paper is to test for the persistence of the landlord-tenant energy efficiency problem in the residential rental property market in the presence of information on property energy performance. To do this, we compare the efficiency of rental and non-rental properties using a combination of Coarsened Exact Matching (CEM) and parametric regression. We use a sample of 585,578 residential properties in the Republic of Ireland - a region that legally requires rental properties to display energy performance certificates when advertised. The findings suggest that the landlord-tenant problem is present in the Irish rental market but that it is not uniform across locations, indicating the influence of other factors. To explore this further, we exploit the regional variation in rental property prices. We find a larger difference between rental and non-rental properties’ energy efficiency in markets with scarcity in rental property supply. In addition, we are able to take advantage of a unique trait in building design to compare rental and non-rental properties which were identical at the time of their construction. The findings from this sub-group mirror our finding for the sample as a whole.

Suggested Citation

  • Petrov, Ivan & Ryan, Lisa, 2021. "The landlord-tenant problem and energy efficiency in the residential rental market," Energy Policy, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:enepol:v:157:y:2021:i:c:s0301421521003281
    DOI: 10.1016/j.enpol.2021.112458
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    5. Singhal, Puja & Sommer, Stephan & Kaestner, Kathrin & Pahle, Michael, 2023. "Split-incentives in energy efficiency investments? Evidence from rental housing," Ruhr Economic Papers 992, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
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    More about this item

    Keywords

    Energy efficiency; Market failures; Energy performance certificate (EPC); Coarsened exact matching (CEM); Residential properties; Information asymmetry; Split incentives;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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