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Temporal dynamics of rent regulations – The case of the German rent control

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  • Breidenbach, Philipp
  • Eilers, Lea
  • Fries, Jan

Abstract

In response to strong rental price increases, Germany's Federal Government introduced a rent control in 2015 aiming to disburden low-income households. Beside the general effectiveness of rent control, this study analyses temporal dynamics of the obtained effect and the effectiveness for the target group. Applying a triple difference event study approach on rental offer price data, we find that the rent control indeed has significant success, dampening rental prices by up to 5% for all dwellings (up to 9% for specific types). However, the effect vanishes about one year after the implementation, causing basically no effect on rental prices afterwards. Moreover, the rent control mostly benefits areas inhabited by high-income households, missing its original policy goal. Despite the poor persistent effectiveness on rental prices, quality of the offered dwellings suffers from the rent control.

Suggested Citation

  • Breidenbach, Philipp & Eilers, Lea & Fries, Jan, 2022. "Temporal dynamics of rent regulations – The case of the German rent control," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:regeco:v:92:y:2022:i:c:s0166046221000971
    DOI: 10.1016/j.regsciurbeco.2021.103737
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    Cited by:

    1. Konstantin A. Kholodilin, 2022. "Rent Control Effects through the Lens of Empirical Research," DIW Roundup: Politik im Fokus 139, DIW Berlin, German Institute for Economic Research.
    2. Joan Monràs & José Garcia Montalvo, 2021. "The effect of second generation rent controls: New evidence from Catalonia," Economics Working Papers 1836, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2022.
    3. Ahlfeldt, Gabriel M. & Heblich, Stephan & Seidel, Tobias, 2023. "Micro-geographic property price and rent indices," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    4. Miguel-Ángel López García, 2023. "Controles de alquileres," Hacienda Pública Española / Review of Public Economics, IEF, vol. 246(3), pages 165-206, September.
    5. Joan Monras & Jose G. Montalvo, 2023. "The Effect of Second-Generation Rent Controls: New Evidence from Catalonia," Working Paper Series 2023-28, Federal Reserve Bank of San Francisco.
    6. Konstantin A. Kholodilin & Fernando A. López & David Rey Blanco & Pelayo González Arbués, 2022. "Lessons from an Aborted Second-Generation Rent Control in Catalonia," Discussion Papers of DIW Berlin 2008, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    Rent control; Temporal dynamics; Event study; Triple difference;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • 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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