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Elimination of Rent Control in the Swedish Rental Housing Market: Why and How?

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  • Roland Andersson
  • Bo Söderberg

Abstract

If housing market rent control is completely eliminated, welfare gains may arise from tenant redistribution. The amount of such welfare gains is estimated at approximately SEK 20 billion (approximately USD 3 billion) for inner Stockholm. In addition, welfare gains may arise from the production of new housing. We demonstrate that total deregulation is preferable to partial deregulation limited to new housing. Furthermore, inefficient overproduction of new housing would follow partial deregulation. Tenants facing rent increases if rent control were phased out would suffer welfare losses, and should be compensated to fulfill the Pareto criterion. Various compensation models could be used, as analyzed here. The amounts necessary to fully compensate tenants in attractive submarkets may be substantial. The Pareto criterion is not necessarily a desirable guideline for politicians if it implies huge wealth redistribution; it is still, however, a natural criterion in connection to all welfare economic analysis.

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  • Roland Andersson & Bo Söderberg, 2012. "Elimination of Rent Control in the Swedish Rental Housing Market: Why and How?," Journal of Housing Research, Taylor & Francis Journals, vol. 21(2), pages 159-181, January.
    • Handle: RePEc:taf:rjrhxx:v:21:y:2012:i:2:p:159-181
    DOI: 10.1080/10835547.2012.12092062
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    Cited by:

    1. Donner, Herman, 2024. "Youth Displacement in Rent-Controlled Housing: The Consequences of Housing Queues," Working Paper Series 24/6, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance, revised 19 Sep 2024.

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