Temporal Dynamics of Rent Regulations - The Case of the German Rent Control
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.
Breidenbach, P., L. Eilers and J. Fries (2022), Temporal Dynamics of Rent Regulations - The Case of the German Rent Control. Regional Science and Urban Economics, 92, 103737