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The effect of rent regulations and contract structure on renovation: A theoretical analysis of the Swedish system
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0003-4841-5056
2014 (English)Report (Other academic)
Abstract [en]

The standard view is that rent regulation leads to reduced maintenance as the landlord will be able to find tenants at the regulated rent even if the level of maintenance is low. In this article it is shown that the rent regulation system in Sweden interacts with a contract structure where the rent is allowed to increase only if the standard of the apartment is raised compared to when the apartment was new. Ordinary maintenance is included in the rent, and the rent is therefore not allowed to increase when such maintenance is carried out.  It is shown that when there is a housing shortage this system creates economic incentives for increasing the standard of the apartment even if this reduces total welfare. The result can be that quality is increased more than in a market system, and that it can increase gentrification compared to such a system. Policy proposals are also presented.

Place, publisher, year, edition, pages
KTH Royal Institute of Technology, 2014. , 18 p.
, Working Paper Series, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin), 14/10
Keyword [en]
rent regulation, maintenance, renovation, Sweden, gentrification
National Category
Economics and Business
URN: urn:nbn:se:kth:diva-154724OAI: diva2:758315

QC 20141113

Available from: 2014-10-27 Created: 2014-10-27 Last updated: 2014-11-13Bibliographically approved

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fulltext(210 kB)227 downloads
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Lind, Hans
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