Imputed rent and distributional effects of housing-related policies in Estonia, Italy and the United Kingdom

Abstract

Housing policies are a complex set of taxes, benefts and incentives. This paper evaluates the redistributive effect of a comprehensive set of housing-related policies, taking into account the housing advantage of homeowners and social tenants. We use the Euromod microsimula-tion model to simulate housing policies in Estonia, Italy and the United Kingdom. Disentangling the contribution to inequality and poverty of each housing-related policy, we fnd that the current design of property taxes is not progressive and that other housing policies have a limited impact on inequality in Estonia and on both inequality and relative poverty in Italy. Only in the UK are housing policies more important than imputed rent in reducing inequality and poverty. In all three countries, housing-related policies favor the elderly. Although the United Kingdom has the most effective system of housing policies, Estonia seems to have the most effcient one.