The Effect of Rent Regulations and Contract Structure on Renovation: A Theoretical Analysis of the Swedish System
2015 (English)In: Housing, Theory and Society, ISSN 1403-6096, E-ISSN 1651-2278, Vol. 32, no 4, 389-406 p.Article in journal (Refereed) Published
The standard view is that rent regulation leads to a reduction in 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 apartments, 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
2015. Vol. 32, no 4, 389-406 p.
Rent regulation, Maintenance, Renovation, Sweden, Gentrification
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-175517DOI: 10.1080/14036096.2015.1053981ISI: 000361829600002ScopusID: 2-s2.0-84942192282OAI: oai:DiVA.org:kth-175517DiVA: diva2:862248
FunderSwedish Research Council Formas
QC 201510212015-10-212015-10-162015-10-21Bibliographically approved