Staff Reports
The Effects of Leverage on Investments in Maintenance: Evidence from Apartments
Number 1000
December 2021

JEL classification: G3, G31, R30

Authors: Lee Seltzer

This paper studies the sensitivity of investment in apartment building maintenance to building debt levels. I use a novel data set combining housing code violations from forty-five U.S. cities with apartment financing information to show that highly leveraged buildings tend to be less well maintained. I then exploit a natural experiment that effectively increases building leverage for some New York City rent-stabilized buildings, but not others. Following the shock, violations increase for affected buildings relative to unaffected buildings. This change in violations is concentrated among more highly leveraged buildings. The results are consistent with debt-reducing investments in maintenance, with consequences for renter quality of life.

Available only in PDF
Lee Seltzer
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at
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