Discussion Paper Details

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Title: Agreements Must Be Kept? Residential Leases during Covid-19

Author(s): Itai Ater, Yael Elster, David Genesove and Eran Hoffmann

Publication Date: July 2020

Keyword(s): Bargaining, contract renegotiation, COVID-19, Relational Contracts and rental

Programme Area(s): Industrial Organization

Abstract: This paper studies how a Covid-19 lockdown affected residential lease payments. Survey data on 1511 Israeli renter households show nearly one in eight households not paying full rent during the lockdown, with these households holding back, on average, a third of their contractually due rent. Financially fragile households with greater income cuts, and households with leases lacking provisions that effectively provide for damages upon non-payment pay a lower share of contract rent. So do households with more frequent encounters with their landlord, or longer tenure in the apartment. Bargaining and relational contracts theories help explain these results.

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Bibliographic Reference

Ater, I, Elster, Y, Genesove, D and Hoffmann, E. 2020. 'Agreements Must Be Kept? Residential Leases during Covid-19'. London, Centre for Economic Policy Research.