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Stars and standards: Energy efficiency in rental markets


  • Burfurd, Ingrid
  • Gangadharan, Lata
  • Nemes, Veronika


Evidence suggests that rental properties are often associated with lower levels of energy efficiency than owner-occupied buildings. Policy makers are increasingly concerned about this energy efficiency gap. In this paper, we investigate the energy investments made and the market efficiency gains associated with different policy interventions at the point of lease. We introduce key features of the housing rental market in the laboratory and examine four policy options: mandatory information on energy efficiency, voluntary information, mandatory minimum standards, and a ‘cost-share’ treatment (i.e., landlords pay a share of the tenants’ energy bill). We find that enabling landlords to post the energy efficiency of their properties increases investment in energy efficiency. Voluntary information achieves efficiency levels comparable to those under a mandatory programme but may lead to lower levels of tenant participation. Mandatory minimum standards lead to higher investments in energy efficiency, but also reduce the number of properties available for lease. Cost-sharing leads to low market efficiency levels, perhaps due to the uncertainty landlords face regarding the energy bill of their tenants.

Suggested Citation

  • Burfurd, Ingrid & Gangadharan, Lata & Nemes, Veronika, 2012. "Stars and standards: Energy efficiency in rental markets," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 153-168.
  • Handle: RePEc:eee:jeeman:v:64:y:2012:i:2:p:153-168
    DOI: 10.1016/j.jeem.2012.05.002

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    References listed on IDEAS

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    Cited by:

    1. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    2. repec:eee:appene:v:205:y:2017:i:c:p:1021-1033 is not listed on IDEAS
    3. Michelsen, Claus & El-Shagi, Makram & Rosenschon, Sebastian, 2016. "The diffusion of "green'' buildings in the housing market: empirics on the long run effects of energy efficiency regulation," Annual Conference 2016 (Augsburg): Demographic Change 145534, Verein für Socialpolitik / German Economic Association.
    4. repec:eee:enepol:v:108:y:2017:i:c:p:369-378 is not listed on IDEAS
    5. Hope, Alexander John & Booth, Alexander, 2014. "Attitudes and behaviours of private sector landlords towards the energy efficiency of tenanted homes," Energy Policy, Elsevier, vol. 75(C), pages 369-378.
    6. Fuerst, Franz & Oikarinen, Elias & Harjunen, Oskari, 2016. "Green signalling effects in the market for energy-efficient residential buildings," Applied Energy, Elsevier, vol. 180(C), pages 560-571.


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