Regulation is the second characterization to consider when estimating welfare. The presence of regulated housing in a market creates a set of tenants who benefit from housing at a subsidized price. This price is not reflective of the market price or price that would have been paid for the same housing in the absence of regulation. Imputation of rent for subsidized tenants in such a market, thus, becomes important to ensure comparability of welfare across households living in regulated and unregulated housing.

# _Data and Descriptive Statistics_

To better understand the Egyptian context, we exploit very detailed data from the Household Income, Expenditure, and Consumption Survey (HIECS) 2012/13. The HIECS provides very detailed information on the ownership status of dwellings including: a) Ownership status across different living situations: owners; tenants under the Old Rent Law, tenants under the New Rent law and tenants that enjoy the dwelling “in‐kind”, and b) For each type of ownership status, a question on actual or self‐reported value of rent is recorded.<sup>8</sup> In addition, the survey includes information on the characteristics of the dwellings such as type of structure, type of floor, ceiling, materials in walls, dwelling size in square meters, access to water, access to the sanitation network and so on. The survey also has detailed information on consumption expenditures undertaken by households, thus enabling us to look at the impact of adjusted rents on the measures of welfare.

We find evidence that rental regulation still affects a significant share of households in Egypt. Table 1 shows the distribution of households by type of dwelling occupation for each region. About a third of households in metropolitan areas of Egypt live in dwellings governed by the old law. The share of renters under the old law is not as high as in other urban areas but more prevalent as compared to rural areas, as expected. The share of households who own the dwellings they inhabit is significantly higher in rural areas as compared to urban areas. It also seems that rented dwellings under the old law are more prevalent in metropolitan areas.

The share of households living in regulated dwellings in different urban regions has decreased somewhat in the last ten years, with _New law_ dwellings becoming increasing prevalent.<sup>9</sup> Nonetheless the share of _Old law_ tenants remains significantly higher in Metropolitan and Upper Urban regions. It is, thus, fathomable that with time, even though more housing units are being constructed, an important share of households are reluctant to rent because the associated market rent is high, leading to vacant properties.<sup>10</sup>

> 8 Information on secondary dwellings is available, however, very few households have anything to report.

> 9 Based on HIECS data. In 2005, the shares of Old law and New law tenants were as follows: Metropolitan (51% and 4%), Lower Urban (27.5% and 5.5%) and Upper Urban (28.9% and 4.7%), respectively. In 2015, the shares of Old law and New law tenants were: Metropolitan (28% and 13.5%), Lower Urban (13% and 11%) and Upper Urban (17% and 9.8%), respectively.

> 10 For instance, the National Statistics Office found that approximately 7.5 million housing units were vacant.

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