How Does Emissions-Charging Influence House Prices? Evidence From London’s ULEZ

In 2019, the Ultra Low Emissions Zone (ULEZ) was implemented in London: a daily charge on all non-compliant cars driven in a specified zone. This zone was expanded in 2021 and again in 2023. I construct a novel dataset on UK house sales, and use a staggered difference-in-differences design to find that the implementation of the ULEZ led house prices in these expansion zones to fall on average by roughly 3-4% over the following year. This corresponds to a windfall loss to the average London homeowner of roughly £25,000, or half the median annual salary in the region. This result is robust to considerable weakening of the parallel trends assumption. It is also robust to different methods of dealing with spatial spillovers, and I quantify the spillover effects to find that the ULEZ leads prices of houses just outside the region to fall by roughly 2% over a similar time-frame. Beyond two years after implementation, the main negative effect begins to recover, which I justify as a product of asymmetric information transmission.