Split-incentives in energy efficiency investments? Evidence from rental housing

Puja Singhal, Stephan Sommer, Kathrin Kaestner and Michael Pahle

No 992, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Rental housing where tenants are responsible for their own energy bills but landlords are responsible for energy retrofits may pose a particular challenge in achieving optimal rates of investments in energy efficiency. In this paper, we investigate the severity of this split-incentive problem in thermal efficiency investments in the German housing market, where the share of renters is among the highest in the European Union and the majority of rented apartments is owned by private individuals. Using data on energy performance scores from Germany's largest online housing market platform between 2019 and 2021, we find economically small differences in the energy efficiency levels between apartments that are offered for sale for own use compared to those that are rented out on the housing market. These findings suggest that there may not be a critical energy efficiency deficit due to the high share of renters in the multi apartment building sector.

Keywords: Energy efficiency; split-incentives; housing market; owner-renter problem (search for similar items in EconPapers)
JEL-codes: Q41 Q50 Q54 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ene and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:992

DOI: 10.4419/96973158

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