How Does an Expansion of Mandatory Inclusionary Housing Affect Housing Supply?

Problem, research strategy, and findings Mandatory inclusionary housing, which requires private developers to include a portion of affordable housing units in market-rate developments, has become an internationally popular policy instrument recapture land value create housing. Two common criticisms mandatory are that 1) it produces limited 2) constrains supply pushes up prices. In this study we examined how responded expansion strong scheme London (UK). Between 2005 2008, each the 33 local authorities Greater extended their requirements, previously for projects with 15 or more units, those 10 14 units. We found led reduction new developments target market segment (projects units) increase unregulated alternative 9 fewer units). There was no net loss homes, though strategic behavior could have dampened output housing.Takeaway practice Our suggest that, given appealing alternatives low barriers, tend divert development avoid This, overall, calls better evaluation potential comprehensive, regional approach maximize its effectiveness minimize impacts on supply.