Who Moves Out of Social Housing? The Effect of Rent Control on Housing Tenure Choice

Abstract

Rent control provides substantial in-kind benefits to tenants of social housing. In the Netherlands these benefits equal almost 40% of the market rent on average. We show that rent control benefits for the 10% tenants with highest income are 5% points higher than the benefits for the 10% with lowest incomes. Next we provide evidence that rent control influences the housing tenure choice decision. We find that on average rent control reduces transitions within the social housing sector, but not transitions from the social housing sector. Only the 20% tenants with highest incomes postpone moves out of social housing in response to rent control. This suggests that the inequitable distribution of rent control benefits is prolonged by the reduction in transition rates out of social housing. It also suggests that recent policy in the Netherlands that reduces rent control benefits for high income households can increase the mobility of those affected.

Delivering affordable housing and neighborhood quality: A comparison of place- and tenant-based programs

“…Similarly, Kattenberg and Hassink (2017) show that in the Netherlands the rent savings for social housing tenants are on average equal to almost 40% of the market rent and are higher in municipalities with high house values and little social housing. Burge (2011) in turn analyzes the low-income housing tax credit (LIHTC) program in the U.S. and finds that rent savings are sizable, but at the same time constitute a relatively small fraction of the programs costs.…”

“…The welfare effects from misallocation have been estimated in the context of rent control in the U.S. (Early, 2000 andGlaeser andLuttmer, 2003) and in public housing in the Netherlands (Van Ommeren and Van der Vlist, 2016) and they appear to be substantial. Kattenberg and Hassink (2017) report that in the Netherlands the lock-in effects are strong especially for tenants with relatively high incomes. This issue is important when assessing which type of households benefit from public housing.…”

“…In less sought-after neighborhoods where rent savings in public housing are smaller, public housing tenants may be more willing to move from public housing when their income increases. Finally and in connection to the second point, the public housing units in sought-after neighborhoods may become vacant less frequently (see also Kattenberg and Hassink, 2017). Low-income households may not be able to afford to wait for such a unit, and therefore, are not selected into attractive locations.…”

Real estate rental market: a 10-year bibliometric-based review

“…Regulation of the real estate rental market. Mature RERMs are commonly regulated by necessary policies, such as a rent control policy (Diamond et al, 2019;Kattenberg & Hassink, 2017), rent supplement schemes (Blessing, 2016;Watson & Corrigan, 2019), and regulation of rental contracts (Huisman, 2016;Moon, 2018). In emerging countries, the RERM may be immature, imperfect, and also lack sufficient regulations and policies.…”

Home Ownership and Home Equity Promote Entrepreneurial Activity

“…The share of homeowners among the Dutch population is in the medium range compared, to other European countries. About 35% of the residences are in the social housing sector; 5% percent in the commercial rental sector and 60% in the owneroccupied sector (Kattenberg & Hassink, 2017). A third feature of the Dutch economy is the highly developed residential mortgage market with particularly high loan-to-value (LTV) ratios at origination.…”