Agreements Must Be Kept? Residential Leases during COVID-19

38 Pages Posted: 24 Jul 2020

See all articles by Itai Ater

Itai Ater

Tel Aviv University - Coller School of Management

Yael Elster

Tel Aviv University - Coller School of Management

David Genesove

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR)

Eran Hoffmann

Hebrew University of Jerusalem

Multiple version iconThere are 2 versions of this paper

Date Written: July 23, 2020

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.

Keywords: COVID-19, bargaining, contract renegotiation, rental, relational contracts

JEL Classification: D86, C7, R3

Suggested Citation

Ater, Itai and Elster, Yael and Genesove, David and Hoffmann, Eran, Agreements Must Be Kept? Residential Leases during COVID-19 (July 23, 2020). Available at SSRN: https://ssrn.com/abstract=3659328 or http://dx.doi.org/10.2139/ssrn.3659328

Itai Ater

Tel Aviv University - Coller School of Management ( email )

Tel Aviv
Israel

Yael Elster

Tel Aviv University - Coller School of Management ( email )

Tel Aviv
Israel

David Genesove (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3128 (Phone)
+972 2 581 6071 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Eran Hoffmann

Hebrew University of Jerusalem ( email )

Jerusalem
Israel

HOME PAGE: http://https://sites.google.com/view/eranbhoffmann/

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