The removal of rent control and its impact on search and mismatching costs: evidence from Oslo

Abstract

The removal of the Norwegian rent control in 1982 created a natural experiment that enabled us to investigate whether rent control affected the search and matching process in the private residential rental market in the Norwegian capital, Oslo. We collected and analysed data on ‘housing for rent’, ‘housing wanted’ and ‘housing exchange-wanted’ advertisements in Oslo covering a period from 1970 to 2008. We concluded that the use of newspaper listing services by potential tenants and landlords changed after the rent control removal. Our results indicate that it is more costly, in time and money, for a potential tenant to search for and to find a home under rent control. Moreover, our results indicate that rent control increases the probability of and the distance from the ideal dwelling, in size, standard and location, a potential tenant have to settle for.