Publication details

Impacts of Rent Deregulation Process on Household Behavior: Lessons from the Czech and Slovak Republics



Year of publication 2015
Type Article in Proceedings
Conference Proceedings of the 20th International Conference Theoretical and Practical Aspects of Public Finance 2015
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords housing;tenure;rent;deregulation;regression
Description Rent control can be treated as a measure which aims to subsidize specific group of households – tenants. The subsidy takes form of reduced rent which is financed both by the private owners and municipalities (i.e. public budgets). Besides the reduction of such subsidy, deregulation process aims to improve effectiveness of housing market. This might increase overall mobility of households with subsequent potential positive impacts on diverse economic indicators. Our analysis deals with one potential impact of rent deregulation process – changes in tenure choice patterns. Existing literature defines several typical factors which influence this key decision every household has to make. The paper examines the potential factors using an econometric model drawing on sample data (the panel data based on investigation of EU-SILC) in the Czech Republic and Slovakia. In our analysis we propose one more factor which might be of interest. Based on the Czech data covering the period of the rent deregulation process in 2007-2011 we assess to what extent rent deregulation itself has influenced the tenure choice patterns. Our analysis using probit model did prove that regulated rents were an important factor affecting tenure choice in the Czech Republic. After deregulation households living in apartments with regulated rent preferred to buy house rather than stay in rental sector.
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