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Landlords versus tenants: Information asymmetry and mismatched preferences for home energy efficiency

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  • Phillips, Yvonne

Abstract

New Zealand homes are poorly insulated by international standards. There are government subsidies available for people to improve the energy efficiency of their homes but uptake has been relatively low among owners of rental properties. This paper presents the results of a choice experiment used to investigate the preferences of home owners and tenants for insulation and heating upgrades. The responses indicate that landlords may underestimate how cold their rental properties are in winter, considering the level of discomfort reported by tenants. Median willingness-to-pay (WTP) for improved insulation by landlords is only 50–70% of owner-occupier values. Landlords are willing to pay more for a heating appliance than any other retrofit option. In contrast, tenants have a low WTP for the heating appliance and would prefer under-floor insulation. Tenants express a willingness to pay higher rent in exchange for improved energy efficiency, at a rate that would appear to make such upgrades economic for the landlord. Information asymmetry and lack of appropriate market signals may be a large part of the reason why many landlords are not willing to pay market prices for energy efficiency upgrades.

Suggested Citation

  • Phillips, Yvonne, 2012. "Landlords versus tenants: Information asymmetry and mismatched preferences for home energy efficiency," Energy Policy, Elsevier, vol. 45(C), pages 112-121.
    • Handle: RePEc:eee:enepol:v:45:y:2012:i:c:p:112-121
    DOI: 10.1016/j.enpol.2012.01.067
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