The current research paper “Investment incentives of rent control and gentrification - Evidence from German micro data” by Vera Baye and Prof. Dr. Valeriya Dinger has been accepted for publication in Real Estate Economics, the journal of the American Real Estate and Urban Economics Association (AREUEA).
The paper empirically shows that the effectiveness of the German rent control introduced in 2015 is limited in terms of the affordability of rental housing. As one reason for this, the authors identify a causal negative effect of the rent freeze on the yield of rental properties subject to regulation. In addition, they examine the spillover effects between regulated properties and properties in the affected markets that were exempt from regulation and identify rising yields for the exempt properties. The study thus emphasizes that regulation contributed to gentrification by shifting the supply of rental housing away from the regulated segment.
