Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/213310 
Year of Publication: 
2020
Series/Report no.: 
DIW Discussion Papers No. 1839
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
The (re-)introduction of rent regulation in the form of rent controls, tenant protection or supply rationing is back on the agenda of policymakers in light of rent inflation in many global cities. While rent control as social policy promises short-term relief, economists point to their negative long-run effects on new construction. This paper present long-run data on both rent regulation and housing construction for 16 developed countries (1910-2017) and 44 developing countries since the 1980s to confirm the economists' view generally, albeit with certain reservations. The negative effect of regulation can be offset by exemptions for new construction, by compensating government construction and by a flight of new construction into the owner-occupied sector. The overall magnitude of the effect is therefore not as high as expected and shows non-linearities. But, although rent control is usually introduced with good social-policy intentions, it generally risks to crowd out its object of regulation through inhibiting new construction.
Subjects: 
residential construction
rent control
tenure security
housing rationing
panel data model
JEL: 
C23
O18
R38
Document Type: 
Working Paper

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