Staff Reports
Financing Constraints and Maintenance Investments: Evidence from Apartments
Previous title: “The Effects of Leverage on Investments in Maintenance: Evidence from Apartments”
Number 1000
December 2021 Revised February 2023

JEL classification: G3, G31, R30

Authors: Lee Seltzer

This paper studies whether renters bear the costs of building financing constraints in the form of reduced maintenance. Using a novel data set combining housing code violations from forty-five U.S. cities with apartment financing information, I show more financially constrained buildings incur more code violations. I then exploit a natural experiment, effectively reducing financial resources for some New York City rent-stabilized buildings. Following the shock, code violations increase for affected buildings relative to controls, and the effect is concentrated among more financially constrained buildings. The results are consistent with financing constraints reducing maintenance.

Available only in PDF
Lee Seltzer
The author received funding for this project from the Real Estate Center at the McCombs School of Business while a PhD student at McCombs. 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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