Horizon Risk in Renting: Evidence from a PropTech Rental Platform

63 Pages Posted: 6 Apr 2022 Last revised: 11 Dec 2023

See all articles by Jiayin Hu

Jiayin Hu

Peking University - National School of Development (NSD); Peking University - Institute of Digital Finance; Peking University - China Center for Economic Research (CCER)

Maggie Hu

The Chinese University of Hong Kong

Shangchen Li

Guanghua School of Management, Peking University

Yingguang (Conson) Zhang

Peking University - Department of Finance, Guanghua School of Management

Zheng Zhang

Peking University - Department of Finance, Guanghua School of Management

Date Written: July 5, 2022

Abstract

Rental contracts are often short-term, creating uncertainty for renters regarding the duration of their occupancy. We analyze the factors influencing the horizon of rental occupancy. Utilizing contract-level data from a PropTech rental platform, we find that housing market conditions significantly impact the rental supply horizon. Landlords in neighborhoods with higher housing price and rent growth offer shorter contracts and are less likely to renew expiring ones. This effect is more pronounced among younger landlords and those with multiple or highly marketable properties. We further establish causality using an exogenous policy change that differentially affects the prices of different housing units.

Keywords: Housing price, rental housing, contract duration, horizon risk, PropTech

JEL Classification: G11, G41, L85, R31, R38

Suggested Citation

Hu, Jiayin and Hu, Maggie and Li, Shangchen and Zhang, Yingguang and Zhang, Zheng, Horizon Risk in Renting: Evidence from a PropTech Rental Platform (July 5, 2022). Available at SSRN: https://ssrn.com/abstract=4060219 or http://dx.doi.org/10.2139/ssrn.4060219

Jiayin Hu

Peking University - National School of Development (NSD) ( email )

5 Yiheyuan Rd
Beijing, China 100871

HOME PAGE: http://nsd.pku.edu.cn/szdw/qzjs/h/496603.htm

Peking University - Institute of Digital Finance ( email )

5 Yiheyuan Rd
Haidian District
Beijing, 100871
China

Peking University - China Center for Economic Research (CCER)

5 Yiheyuan Rd
Beijing, China 100871

Maggie Hu

The Chinese University of Hong Kong ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Hong Kong, N.T.
Hong Kong

Shangchen Li

Guanghua School of Management, Peking University ( email )

Yingguang Zhang (Contact Author)

Peking University - Department of Finance, Guanghua School of Management ( email )

Beijing, Beijing 100871
China

Zheng Zhang

Peking University - Department of Finance, Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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