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Buy to Let: The Role of Rental Investors in Housing Booms

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  • Erlend Eide Bø

Abstract

How do rental investors affect housing price dynamics? I develop a search model that allows housing owners to invest in rental housing. The model matches the high investor share and housing price increase observed in a housing boom in Oslo, Norway, while featuring increasing price‐to‐rent, and correlation of the buy‐to‐let share with housing price growth. In the model, an exogenous shock to population inflow increases demand for both owned and rented housing. Increased rental demand induces more buy‐to‐let investors to enter the market, adding extra demand to the housing market. Search frictions are important to explain an increasing price‐to‐rent ratio.

Suggested Citation

  • Erlend Eide Bø, 2026. "Buy to Let: The Role of Rental Investors in Housing Booms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 67(2), pages 657-696, May.
    • Handle: RePEc:wly:iecrev:v:67:y:2026:i:2:p:657-696
    DOI: 10.1111/iere.70054
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