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Tenancy Rent Control and Credible Commitment in Maintenance

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  • Richard Arnott

    () (Boston College)

  • Elizaveta Shevyakhova

Abstract

Under tenancy rent control, rents are regulated within a tenancy but not between tenancies. This paper investigates the effects of tenancy rent control on housing quality, maintenance, and rehabilitation. Since the discounted revenue received over a fixed-duration tenancy depends only on the starting rent, intuitively the landlord has an incentive to spruce up the unit between tenancies in order to 'show' it well, but little incentive to maintain the unit well during the tenancy. The paper formalizes this intuition, and presents numerical examples illustrating the efficiency loss from this effect.

Suggested Citation

  • Richard Arnott & Elizaveta Shevyakhova, 2007. "Tenancy Rent Control and Credible Commitment in Maintenance," Boston College Working Papers in Economics 661, Boston College Department of Economics.
  • Handle: RePEc:boc:bocoec:661
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    Cited by:

    1. O'Toole, Conor & Martinez-Cillero, Maria & Ahrens, Achim, 2019. "Price regulation, inflation, and nominal rigidity in housing rents," Papers WP648, Economic and Social Research Institute (ESRI).
    2. Arnott, Richard & Shevyakhova, Elizaveta, 2014. "Tenancy rent control and credible commitment in maintenance," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 72-85.
    3. Blair Jenkins, 2009. "Rent Control: Do Economists Agree?," Econ Journal Watch, Econ Journal Watch, vol. 6(1), pages 73-112, January.
    4. Thomschke, Lorenz, 2016. "Distributional price effects of rent controls in Berlin: When expectation meets reality," CAWM Discussion Papers 89, University of Münster, Center of Applied Economic Research Münster (CAWM).

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    More about this item

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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