AGENCY AND OWNERSHIP OF HOUSING

In this model, landlords cannot enforce leases conditional on their tenants' efforts to care for their residences, but can exploit economies of scale in maintenance. Also, multifamily properties that have been converted from rental apartments to condominiums or cooperatives cannot be reconverted. In this case, tenants optimally expend less effort on care than homeowners, while landlords partly offset this reduced care with extra maintenance. As a result, single-family houses and residences in small multifamily dwellings are optimally owned by their occupants, while residences in large dwellings are optimally rented to tenants. These results are roughly consistent with the available data.