Insuring Landlords
Abstract
This paper demonstrates that unpaid rent risk makes landlords reluctant to supply housing services to fragile tenants; and that insuring owners against it improves the access of renters to high-opportunity neighborhoods. We study the implementation of Visale, a publicly funded rent guarantee insurance policy in France, free of charge to eligible tenants and landlords. We exploit tax registry information on all French households, exhaustive data on Visale beneficiaries and claim payouts, and quasi-experimental eligibility variation across renters. We demonstrate that the non-payment guarantee increased access to private-sector rental housing for eligible tenants. The effects are stronger for immigrants and those with low or volatile incomes, who often do not satisfy standard screening criteria for landlords. The scheme eased the spatial mobility of low-income renters towards higher-wage, higher-rent locations. It led to new household formation, some reallocation of the vacant housing stock, and substitution out of public housing, but may have displaced ineligible households in tighter housing markets.
