Housing tenure and subjective poverty among young European adults: The role of rent regulation

Abstract

Poverty has spread in Europe over the last decade, becoming a central issue in the political debate. Alongside objective measures of poverty, assessing the level of subjective poverty, especially among young adults, is important because of the consequences that feeling poor can have on household fertility decisions, consumption, and investment in human capital. Objective and subjective poverty do not fully overlap, and the sense of insecurity can lead to a feeling of not being able to make ends meet. For renters and mortgaged homeowners, housing costs can be a significant burden, and the risk of not being able to pay the rent or mortgage installments can affect young adults’ wellbeing and feeling of poverty. Our study investigates the relationship between tenure status and subjective poverty for households of young independent adults aged 18-34 living in 24 European countries, assessing whether rent regulation plays a role in influencing this association. Using micro-level data from EU-SILC and macro-level data on rent regulation, we estimate multilevel linear regression models with a three-level random effects specification: young household respondents (Level 1) are nested in country waves (Level 2), which in turn are nested within countries (Level 3). Controlling for income level and housing costs, we found that being a tenant or a mortgaged homeowner increases the probability of economic hardship compared to being an outright homeowner. By offering affordable options, rental housing policies can also reduce subjective poverty among young people who are not direct beneficiaries of these policies.