The effects of residential landlord–tenant laws: New evidence from Canadian reforms using census data

We study the consequences of landlord–tenant laws on quality and prices in the rental housing market. We use the staggered introduction of Canadian Residential Tenancy Acts to study the consequences of a landlord–tenant reform that reduced tenants’ litigation costs and improved their bargaining power through mandatory contractual terms. To do so, we employ the difference-in-differences approach to estimate the average treatment effect on a repeated-cross section of households, controlling for income and family structure in five cities. The estimates imply that the reform led to a decline of 2.2 percentage points in the probability of a major defect, with no measurable effect on rent prices or homeownership rates. The average treatment effects are concentrated within families with children, who face greater costs to moving in response to property damage. The results are consistent with a stylized model in which a reduction in litigation costs allows the tenant to more cheaply recover on damages when moving costs are high, with second-generation rent controls limiting increases in rent prices charged by the landlord.