This paper considers two tenure modes-owner- and renter-occupied housing-and models the effect of the rental externality and tenure security on single-family housing quality. We show that both rental externality and tenure security reduce renter-occupied housing quality when the user's utilization, which reduces the quality of the accommodation, and the owner's maintenance, which raises quality, are substitutes. Using single-family housing data in Japan, we obtain empirical results that are consistent with theoretical predictions. These results indicate that conventional wisdom-that the quality of renter-occupied housing is lower than that of owner-occupied housing-is supported for single-family housing in Japan. (C) 2008 Elsevier Inc. All rights reserved.