The Impact of Residential Rent Controls on Lender Policies and Activities

Arthur L. Wright
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Arthur L. Wright: Department of Finance & Economics Georgia Southern College Statesboro, Georgia 30460, http://www2.gasou.edu/finecon/index.html

Journal of Real Estate Research, 1988, vol. 3, issue 3, 85-90

Abstract: The general merits of rent control have been debated for years but few have questioned their effects upon institutional lending policies. This study investigates actual lending terms as well as opinions from lending institutions involved with both rent-controlled and non-controlled multifamily housing projects. The results indicate there is very little difference between lending requirements for either type project. Lenders are more concerned with the ability of the project to meet the debt service obligations than they are with the overall return to the investor. The adverse impact of rent control on lenders appears to be more on the lenders' beliefs relating to incentives for builders and owners than upon lender requirements and policies.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1988
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