Research - The Distribution of Rental Assistance between Tenants and Landlords: The Case of Students in Central Jerusalem
Research - The Distribution of Rental Assistance between Tenants and Landlords: The Case of Students in Central Jerusalem.
- Students living in rental units in central Jerusalem were provided grants in 2006–11, in order to encourage urban renewal. This led to a marked increase in the number of students in the area.
- Assuming that actual rents and prices quoted in rental notices moved together, the share of the grants reaching the recipients’ landlords ranged from one-fifth to two-fifths.
- The grants led to an increase in rents of about 4–7 percent in the center of the city relative to comparison neighborhoods, for nonrecipients as well, so that the overall additional rent in the center of the city is equivalent to about four-fifths of the grant amounts.
One of the issues that must be dealt with when instituting housing assistance programs is their effects on home prices and on rents of both the beneficiaries and others, and on housing affordability of the target population and the rest of the public. Among the questions that are raised is whether and to what extent the assistance to beneficiaries reaches the sellers or landlords.
Between 2006 and 2011, the Jerusalem Development Authority provided grants to students living in rented accommodations in the center of the city, with the aim of encouraging urban renewal. This lead to a marked increase in the number of students in the area (estimated at about 900 students). The grant per student declined from NIS 6,600 per year at the beginning of the program to NIS 3,400 at the end, and accounted for almost one-quarter of the rent per student by the end of the program.
A joint study undertaken by Noam Zussman from the Bank of Israel and Doron Sayag from the Central Bureau of Statistics examines the distribution of the grants between tenants and landlords.
The database for the study is comprised predominantly of rental advertisements as well as actual rent, taken from the Central Bureau of Statistics Survey of Rents, and administrative data on the rent paid by grant recipients. The research examined the difference (net of the apartment’s features) of the rent in the center of the city during the grants period compared with the periods before and after, vis-à-vis that difference in similar neighborhoods (including near the city center) during those periods. The difference of the differences indicates the effect of the grants on relative rents in the center of the city.
The research indicates—subject to the assumption that actual rents in the various neighborhoods and prices quoted in rental notices moved together—that in the periods around the start of the grant program, and around its cancellation, rent in the city center increased or decreased (respectively) by 4–7 percent relative to the comparison neighborhoods. Therefore the share of the grants reaching the recipients’ landlords ranged from one-fifth to two-fifths. The grants led to an increase in rents in the center of the city for nonrecipients as well (about two-fifths of tenants there), so that the overall additional rent in the center of the city is equivalent to four-fifths of the grant amounts. These rates are within the broad range of findings worldwide.
The grant program focused on certain groups of tenants in a small geographic area, and a large portion of the tenants there benefited from it. These characteristics, as well as other factors, must be taken into account when trying to draw conclusions from this program regarding the distribution of housing assistance in other programs.