Do market rents reflect user costs? 

Journal of Housing Economics (With Erik Buyst)

Standard capital investment theory states that the market rental price of capital services will equal the user cost of capital in equilibrium. The empirical evidence in support of the rent-user cost equivalence theorem is, however, scarce if not non-existent. We examine the relationship between market rents and the user cost of rental properties using a unique micro data set on the earnings and costs of Flemish landlords. Robust regression estimates of portfolio-average rental earnings on portfolio-average user costs point to a strong correspondence at the micro-level. In some cases, we  find a user cost coefficient which is not significantly different from one together with an intercept estimate which is not significantly different from zero.

Reconstructing cities: stimulating redevelopment through the tax code 

Regional Science and Urban Economics

The welfare effect of urban renewal policies depends on the size of the external effects and the quantity of the building stock that gets redeveloped. While evidence on the externalities is growing, there is still a need for credibly identified estimates of the responsiveness of redevelopment. I exploit a sharp reduction in the value added tax (VAT) on construction services for redevelopment in a select group of 32 Belgian cities to fill this gap. The results show that a 15 percentage points reduction in the VAT increases demolished and redeveloped floorspace by 36% and 35% respectively. 

Hold out in land assembly for residential development 

R&R, Journal of Urban Economics

With Thomas Boogaerts

Using the universe of construction permits, sales and land use in Flanders (Belgium), we present new evidence on frictions in the land market. First, developed parcels for assembly projects are bought at a premium of 17%. This premium is not the result of differences in land use restrictions, local prices, reservation prices nor the quality of the existing structure. Second, parcels in assembly projects are less likely to be (re)developed than similar parcels in single-plot projects. The results from three tests suggest that holdout by landowners might be one of the frictions: i) the last acquired plot is sold at an additional premium of 9%, ii) smaller parcels receive a higher premium and are less likely to be (re)developed and iii) assembly projects with more parcels face a higher average premium. Lastly, we document an important difference between developed and undeveloped parcels. While undeveloped parcels in assembly projects are also less likely to be (re)developed, they are bought without a premium. 

Currently being revised.

Housing market responses to the mortgage interest deduction

R&R, Regional Science and Urban Economics

With Sven Damen

This paper examines the incidence of tax subsidies for homeowners. In 2015, the Belgian regions became responsible for the tax subsidy after having been under federal control. The average present value of the subsidies in Flanders decreased by more than 25% relative to the average present value in Wallonia. Exploiting this variation in a difference-in-differences design, we find that changes in the subsidy largely capitalize in the price of housing and land, while the equilibrium quantities remain unaffected. The subsidy was largely captured by current property owners.

Under review.

Split incentives, asymmetric information and energy efficiency subsidies

With Sven Damen & Stef Schildermans

We examine whether adverse selection due to asymmetric information reduces the cost-effectiveness of subsidy programs for energy efficiency investments. In 2009, the Flemish government introduced a reduction in the property tax for newly built houses whose energy efficiency level is below a specific threshold. We find that the response of houses built by a developer is four times smaller than the response of houses built by the owners themselves. This makes the program only half as cost-effective for developer-built housing. Additional data suggests information concerning the efficiency level of housing units was asymmetric between developers and buyers. It usually takes several years before the efficiency level is officially determined and it is not always correctly reported in listings.

Being revised

Taxing vacant land (With Thomas Boogaerts & Stef Schildermans)

See how the land lies (With Sven Damen & Jacqueline Seufert)

The cost of grandfathering standards: evidence from building energy codes (With Stef Schildermans)

Keeping investors at bay: using the transaction tax to increase homeownership (With Joren Vandenbergh)

Reducing tax avoidance through information provision (With Thomas Boogaerts)