give valuable indications as to problem segments (such as high rent or housing cost ratios) that could be addressed by public policies (such as rent allowances), or the impact of certain policy measures (such as removal of rent controls).

In-depth country-by-country rental sector analysis is advisable for all studied countries. The minimum empirical program should include stock and flow modeling, as well as pricing analyses along the lines presented in this chapter, with more detail on specific hypotheses. If household survey data are insufficiently detailed or incomplete, additional surveys in selected urban areas should be conducted. Supply factors such as investor types, regulations, and tax treatment should be addressed, too (see Chapter 4). A survey design template for such studies appears in Annex 2.

The costs of such empirical efforts can be easily justified by the social and private benefits that policy action in favor of a broader and better functioning rental sector would bring. It is particularly advisable for countries experiencing significant private rental sector shortages (Russia and Romania in the study), or facing controversial policy choices, such as the transition from rent control to a market-based system (Poland). Worth further exploration are the interactions between the rental sector and labor market mobility, also in light of the developing spatial economics literature. A better calibration of labor market effects might help governments determine the right focus and scale of rental sector policies.

# **Tenure Policy Research**

There are two relevant areas of future research in tenure policy: (i) detailed analysis of national rental housing policy frameworks; and (ii) cross-country policy studies deepening the understanding of actual practice.

Annex 2 contains a rental housing study template that combines elements of both empirical and policy analysis. In the policy section, it broadly follows the outline of this chapter. Such a template should be applied systematically in transition countries both to inform domestic policy debates and design, and to facilitate international comparison and exchange, including policy dialogue with the Bank.

There is also a need for better understanding of the impact and constraints faced by specific policy measures and comprehensive programs. For example, while there is relatively broad evidence of the distortions caused by hard rent controls, there is little knowledge about best practices for engineering the adjustment from rent control to market mechanisms. Also, alternatives to hard rent ceilings - such as market transparency concepts underlying soft rent controls - better suited to investor-tenant compromise are under-researched. Analogies from the mortgage sector, where usury and adjustment regulations exist in numerous forms, could broaden the feasible policy menu. Similar arguments can be made about alternative taxation models and regulatory incentives or impediments.

Similarly important is the role of the public sector as a rental housing investor, a role that could play an important part in a poverty alleviation strategy, but which has come under “ideological siege” in the past 20 years. Partly as a result of political bias, research into new public investment strategies such as PPP and non-profit rental has subsided.

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