Effects of Financing Constraints on Maintenance Investments in Rent-Stabilized Apartments

Lee Seltzer

No 1000, Staff Reports from Federal Reserve Bank of New York

Abstract: This paper studies whether financing constraints adversely affect renters by reducing maintenance. Consistent with a sensitivity of maintenance to financial resources, housing code violations increased after a change in the law that effectively decreased cash flows available to maintain some rent stabilized buildings in New York City. The effect is most severe when financing constraints are present. Moreover, results of panel regressions using a dataset of 45 cities obtained with Freedom of Information Act (FOIA) requests are consistent with a hypothesis that buildings with higher LTV ratio mortgages have more code violations. Together, the results provide evidence that financing constraints reduce maintenance, an outcome that exacerbates the unintended consequences of rent control.

Keywords: corporate finance; commercial real estate; housing code violations (search for similar items in EconPapers)
JEL-codes: G3 G31 R30 (search for similar items in EconPapers)
Pages: 86
Date: 2021-12-01
New Economics Papers: this item is included in nep-cfn and nep-ure
Note: Previous titles: “The Effects of Leverage on Investments in Maintenance: Evidence from Apartments," "Financing Constraints and Maintenance Investments: Evidence from Apartments”; Revised December 2022, February 2023, August 2024.
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1000.pdf Full text (application/pdf)
https://www.newyorkfed.org/research/staff_reports/sr1000.html Summary (text/html)

Related works:
Journal Article: Effects of financing constraints on maintenance investments in rent-stabilized apartments (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:93551

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().