EFFECT OF THE RENT DEREGULATION ON TENURE CHOICE AND HOMEOWNERSHIP IN THE CZECH REPUBLIC

Ashot Tsharakyan and Petr Zemcik

ERES from European Real Estate Society (ERES)

Abstract: Rent regulation, which was put into effect in the Czech Republic in 1980s, has created a shortage of affordable rental housing in Czech Republic and has resulted in considerable difference between the free-market rents and regulated rents. Due to growing public pressure, in 2006 the government decided to completely remove rent regulation and bring the level of rents for previously regulated dwellings in accordance with market rents by 2011. The rent deregulation can have substantial effects on tenure decisions of both households currently living in regulated rent apartments since it will lead to increase in rent for those apartments as well as on tenure decisions of young households just entering into the housing market since it should intuitively lead to a decrease in current market rents. This research first uses the standard present value model of renting versus owning to predict tenure decision of the households after the deregulation and then compares the prediction of the model with empirical results obtained from logistic regression.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2010-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2010_194

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