Does rent control increase rental returns ? The case of the metropolitan housing market of Lille, France

Guillaume Toussaint and Arnaud Simon
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Guillaume Toussaint: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Arnaud Simon: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: Using machine-learning (ML) methods to appraise rental returns with a rent and a transaction database, we estimate a difference-in-differences (DiD) model to test the effect of rent control (RC) on rents, capital returns and rental returns in Lille, France. Bringing a financial perspective to public policy analysis, we show that the introduction of RC, a tool that is the subject of much debate in economic literature, has negative consequences on the housing market through the signal it sends out to investors rather than through its direct effects. It has led to i) an increase in rents for the largest properties, ii) a decrease in capital returns for all properties and iii) an increase in rental returns for the largest ones. These results are consistent with the predictions of the stock-flow model considering the effects of investor expectations. RC has led to a decrease in housing prices rather than a general decline in rents or rental returns, especially for the largest properties.

Keywords: Rent control; Rental returns; Capital returns; Difference in differences; Mass appraisal (search for similar items in EconPapers)
Date: 2025
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Published in 73rd Congress of the French Economic Association (AFSE -Association Française de Sciences économiques), 2025, Saclay, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05322057

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