The Regulation of Residential Tenancy Markets in Post-War Western Europe: An Economic Analysis

By Mora-Sanguinetti, Juan S. | The European Journal of Comparative Economics, June 2011 | Go to article overview

The Regulation of Residential Tenancy Markets in Post-War Western Europe: An Economic Analysis


Mora-Sanguinetti, Juan S., The European Journal of Comparative Economics


1. Introduction

In several European countries, the weight of the tenancy market relative to the total stock of principal residences has diminished throughout the 20 century. Figure 1 shows, using information held in public databases of the European central banks, recent evidence for 12 European countries.

Several explanations could be provided to understand that general trend, ranging from the finance literature, which considers housing as an investment good, to the more general housing economics literature that regards housing as a consumption good (see Henderson and Ionnides, 1983 and Rosen et al. 1984 for some early references). For instance, in recent decades improvements in access to credit and significant development of the financial markets (Iacoviello and Minetti, 2003, Kumbhakar and Lozano-Vivas, 2004, Blanco and Restoy, 2007) have occurred, which may have favored the property market. Some fiscal regimes have also privileged buying over renting of residences (see Lopez-Garcia, 1996, Garcia-Vaquero and Martinez, 2005, for the case of Spain).

[FIGURE 1 OMITTED]

Nevertheless, it is only some specialized literature which takes into account the effects of regulations and institutions of the tenancy market (other than fiscal policies), such as rent control clauses or periods of protection for tenants. A weak tenancy market and a diminishing rate of tenancy seem to be related, for instance, to the introduction of rent control policies. In this respect, the microeconomic intuition that relates a rent ceiling with a diminishing quantity and quality of residences in the tenancy market has been supported by several theoretical explorations (Basu and Emerson, 2000, Raess and Ungern-Sternberg, 2002, Basu and Emerson 2003) or empirical analyses (Johnson, 1951, Alston et al., 1992, Glaeser and Luttmer, 2003, Sims 2007 among others).

However, most of the research on rent control has merely examined the type of market intervention enforced in local markets of the United States (for a summary, see Turner and Malpezzi, 2003). In contrast, less analysis has been made of the specific effects of European-style tenancy restrictions. Exceptions to that are Pena and Ruiz-Castillo (1984) for Spain, by Munch and Svarer (2002) for Denmark and by Lyytikainen (2006) in respect of Finland.

Moreover, the regulations in force in various European countries impose not only rent control clauses but also clauses of protection term (duration clauses) against eviction. Both kinds of rules may have had an effect on the diminishing share of tenancy in very different economies. At the same time partially liberalizing laws, such as those adopted in the UK (England and Wales) and Finland, may have had the opposite effects.

The aim of this paper is to analyze the regulations specifically directed to the tenancy markets in Europe and to provide a theoretical exploration of their economic implications. The structure of this paper proceeds as follows: firstly, the paper identifies the most common market regulations affecting European tenancy contracts by analyzing the various national laws (section 2). Those regulations are then introduced in a model of tenancy markets to explore their effects theoretically (section 3). Finally, the paper draws some conclusions based on the analysis carried out (section 4).

2. The regulation of housing tenancy markets in Europe

At the beginning of the 20th century, "contractual freedom" inspired the contents of tenancy contracts in several European countries, following the principle of the "autonomy" of private parties. (3) However, as the century progressed, "contractual freedom" was gradually restricted by the introduction of some tenancy regulations (such as rent ceilings, compulsory terms or control over the increase of the rent) which had the objective of improving the situation of tenants in the context of a shortage of rental housing stock following the First and Second World Wars (or the Civil War in the case of Spain). …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Regulation of Residential Tenancy Markets in Post-War Western Europe: An Economic Analysis
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.