State Solutions to Housing Crises: Investigating the Impact of Rent Control Legislation on Residential Vacancy Rates in Ireland

Abstract

This study investigates the impact of Rent Pressure Zones (RPZs) on residential vacancy rates in Ireland. My analysis is focused on the first quarter of 2016 through the fourth quarter of 2021 and examines vacancy rates at the local electoral area level. I employ a two-way fixed effects difference-in-differences model, an event study, and a heterogeneous difference-in-differences model using a doubly robust inverse probability weighting estimator. The results of this study reveal that Rent Pressure Zones are associated with a statistically significant increase in the residential vacancy rates of treated areas. My results reveal a disjunction between general trends in the Irish housing market and the trends in local electoral areas with Rent Pressure Zone legislation. I propose that this deviation might be an indicator of market inefficiency and unoptimized use of residential property. While broader literature has suggested that RPZs have successfully reduced rents in Ireland, the findings of my study emphasize the importance of monitoring other indicators of housing market health to ensure policy optimization. Ultimately my findings show that rent control is not a stand alone policy. While it might successfully reduce price increases, it can impact the functionality of other aspects of the housing market.