The Residency Discount for Rents in Germany and the Tenancy Law Reform Act 2001: Evidence from Quantile Regressions

Fitzenberger Bernd and Fuchs Benjamin
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Fitzenberger Bernd: Humboldt-University Berlin, IZA, CESifo, IFS, ROA, ZEW,Berlin, Germany
Fuchs Benjamin: University of Hohenheim,Stuttgart, Germany

German Economic Review, 2017, vol. 18, issue 2, 212-236

Abstract: Most countries show a residency discount in rents for sitting tenants. In the wake of strong rent increases and housing shortages, Germany implemented a reform in 2001 to curtail rent increases. Based on linked housing-tenant data for Germany, this paper estimates panel OLS and quantile regressions of rents within tenancies. The results show that rents deflated by the CPI increase strongly from 1984 until the reform in 2001, and there is a reversal in the trend afterwards. Before the reform, there is a significant residence discount which decreases in absolute value with tenure. The reform reduces rents, in particular for expensive apartments and for new leases. There is no residency discount after the reform.

Keywords: linked housing-tenant data; rent regression; length of residency discount; rent control; quantile regression. (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1111/geer.12093

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