Taxing Vacant Dwellings: Can fiscal policy reduce vacancy?

Segú, Mariona and Vignolles, Benjamin (2018): Taxing Vacant Dwellings: Can fiscal policy reduce vacancy?

Abstract

We provide the first evaluation of a tax on vacant housing. This instrument has been used increasingly by governments in order to reduce vacancy in large and dense cities with tight housing markets. We use the quasi-experimental setting of the implementation of a tax on vacancy in France in 1999 to identify the causal direct effect of the tax on the vacancy rate. Exploiting an exhaustive fiscal data-set, which contains information on every dwelling in France from 1995 to 2013, we implement a Difference-in-Difference approach combined with a Propensity Score Matching strategy. Our results suggest that the tax was responsible of a 13% decrease in vacancy rates between 1997 and 2001. This impact is twice as high for municipalities with an initially high level of vacancy. Our results also suggest that most of the vacant dwellings moved to primary residences.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords: Housing, Vacancy Rate, Taxes, Impact Evaluation
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R28 - Government Policy; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R38 - Government Policy

References

Andrews, D. (2010): “Real house prices in OECD Countries: The role of demand shocks and structural and policy factors,” Tech. rep., OECD Publishing.

Blossier, F. (2012): “Is taxing inhabitation effective? Evidence from the French tax scheme on vacant housing,” Ph.D. thesis, Ecole polytechnique.

Caldera, A. and A. Johansson (2013): “The price responsiveness of housing supply in OECD countries,” Journal of Housing Economics, 22, 231–249.

Cheshire, P., C. A. Hilber, and H. R. Koster (2015): “Regulating housing vacancies away? The paradoxical effects of mismatch,”

Chetty, R., A. Looney, and K. Kroft (2009): “Salience and taxation: Theory and evidence,” The American economic review, 99, 1145–1177.

Cleach, M.-P. (2003): “Rapport d’information, au nom de la commission des affaires economiques et du plan sur le logement locatif prive,” Ph.D. thesis.

Cunningham, C. R. (2006): “House price uncertainty, timing of development, and vacant land prices: Evidence for real options in Seattle,” Journal of Urban Economics, 59, 1–31.

de La Morvonnais, P. and N. Chentouf (2000): “European public policy concerning access to housing,” Bilancourt, BIPE, France.

Desgranges, G. and E. Wasmer (2000): “Appariements sur le Marché du Logement,” Annales d’Economie et de Statistique, 253–287.

Di, W. and J. C. Murdoch (2013): “The impact of the low income housing tax credit program on local schools,” Journal of Housing Economics, 22, 308–320.

Djankov, S., R. L. Porta, F. Lopez-de Silane, and A. Shleifer (2002): “Courts: The lex mundi project,” Tech. rep., National Bureau of Economic Research.

Eiglsperger, M. and W. Haine (2009): “EU housing statistics,” IFC Bulletins chapters, 31, 111–120.

Ellen, I. G., A. E. Schwartz, I. Voicu, and M. H. Schill (2007): “Does federally subsidized rental housing depress neighborhood property values?” Journal of Policy Analysis and Management, 26, 257–280.

Fack, G. (2005): “Pourquoi les ménages pauvres paient-ils des loyers de plus en plus élevés?[L’incidence des aides au logement en France (1973-2002)],” Economie et statistique, 381, 17–40.

Fitzpatrick, T. e. a. (2012): “What Impact do Anti-vacancy and Anti-bligh Ordinances have on local housing Markets?” .

Gabriel, S. A. and F. E. Nothaft (2001): “Rental housing markets, the incidence and duration of vacancy, and the natural vacancy rate,” Journal of Urban Economics, 49, 121–149.

Gibbons, S. and A. Manning (2006): “The incidence of UK housing benefit: Evidence from the 1990s reforms,” Journal of Public Economics, 90, 799–822.

Grislain-Letrémy, C. and C. Trevien (2014): “The impact of housing subsidies on the rental sector: the French example,” Tech. rep., Institut National de la Statistique et des Etudes Economiques, DESE.

Han, L. and W. C. Strange (2015): “The microstructure of housing markets: Search, bargaining, and brokerage,” in Handbook of regional and urban economics, Elsevier, vol. 5, 813–886.

Immergluck, D. and G. Smith (2006): “The impact of single-family mortgage foreclosures on neighborhood crime,” Housing Studies, 21, 851–866.

INSEE (2016): “France, portrait social,” INSEE Références - Edition 2016.

Kangasharju, A. (2003): “Do the Receivers of Housing Allowance Pay a Higher Rent?” Government Institute for Economic Research (VATT) Discussion Paper, 101.

Kline, P. and E. Moretti (2014): “People, places, and public policy: Some simple welfare economics of local economic development programs,” Annu. Rev. Econ., 6, 629–662.

Laferrère, A. and D. Le Blanc (2004): “Gone with the windfall: how do housing allowances affect student co-residence?” CESifo Economic Studies, 50, 451–477.

Lechner, M. et al. (2011): The estimation of causal effects by difference-in-difference methods, Now.

Lee, K.-y. (2008): “Foreclosure’s price-depressing spillover effects on local properties: A literature review,” Federal Reserve Bank of Boston Community Affairs Discussion Paper, 1, 1–11.

Merlo, A. and F. Ortalo-Magne (2004): “Bargaining over residential real estate: evidence from England,” Journal of urban economics, 56, 192–216.

Mummolo, J. and B. Brubaker (2008): “As foreclosed homes empty, crime arrives,” Washington Post, 27.

Nguyen, M. T. (2005): “Does affordable housing detrimentally affect property values? A review of the literature,” Journal of Planning Literature, 20, 15–26.

Pissarides, C. (1986): “Unemployment and vacancies in Britain,” Economic policy, 1, 499–541.

Priemus, H. (2011): “Squatters and municipal policies to reduce vacancy; evidence from The Netherlands,” in 23rd Conference of the European Network for Housing Research ENHR, Toulouse, July 5-8, 2011, ENHR.

Schilling, J. (2009): “Code enforcement and community stabilization: The forgotten first responders to vacant and foreclosed homes,” Alb. Gov’t L. Rev., 2, 101.

Soes (2011): “Compte du logement 2009 et premières résultats 2010 - Rapport de la Commission des comptes du logement,” collection Références.

Susin, S. (2002): “Rent vouchers and the price of low-income housing,” Journal of Public Economics, 83, 109–152.

Wheaton, W. C. (1990): “Vacancy, search, and prices in a housing market matching model,” Journal of Political Economy, 98, 1270–1292.