Landlords as Lenders: Market and Policy Responses to Non-paying Tenants

Scott Nelson, Assistant Professor of Finance and Cohen and Keenoy Faculty Scholar

Government intervention in rental housing markets has proliferated in recent years, punctuated by COVID-era moratoria on evictions for non-paying tenants. Such regulations may translate into higher rents and reduced supply of rental housing. We undertake the first (to our knowledge) economic analysis of what effects these regulations have and why. In two papers focusing on reduced-form evidence on these regulations' effects, we study (1) how rent prices, security deposits, and screening decisions have responded to COVID-era eviction moratoria, and (2) longer-run market-level responses to extensive, but less severe, regulation over the 2010s, for example tenants' right-to-free-counsel, "just-cause-eviction," mandatory delays in the eviction process, and substantial court taxes/fees for landlords. To understand these effects and to inform optimal policy, in a third paper we estimate a general-equilibrium, dynamic-discrete-choice model of tentants' payment decisions and landlords' screening and eviction decisions, whereby we can chatacterize optimal eviction taxes or regulation.