Financial frictions can arise through various channels, implying different methodologies to account for these disruptions. One standard method is the introduction of collateral constraints. Households and entrepreneurs accumulate real estate which is used as collateral to acquire loans. This requires banks to act as intermediaries between savers and borrowers.

My research is based on the Iacoviello (2015) framework, focussing on the ownership structure of households in the light of financial frictions. Households are now able not only to accumulate real estate as collateral but also to us it to generate income by leasing it to other households. This enables me to analyse the macroeconomic effect of taxes (i.e. stamp-duty), subsidies (help-to-buy) or buy-to-let schemes. Furthermore, I intend to investigate the impact of these factors on rental rates, quantity of loans and housing shares over the business cycle.