This story is being repeated across countries and cities.
It really is high time there is some serious regulation around home ownership, especially as an investment vehicle.
I would even say this is an existential issue for our current civilizational model - the unaffordability of housing is contributing to demographic decline globally.
Too bad most people forgot about this book. It was a bestseller and all the famous economists knew about it and praised it. Even Leo Tolstoy 3000 miles away.
> It really is high time there is some serious regulation around home ownership, especially as an investment vehicle.
Occupancy taxes would be a very good start--especially if applied aggressively to investment holders (resident owners aren't really the problem) who can't demonstrate that they live in a space.
It's a lot harder calculation to hold a space unoccupied in the hope of getting better rent if you're staring down a nice big bill for a place being unfilled. It would also cut down on the whole AirBnB idiocy if you don't automatically classify that as occupied.
Suddenly, you will have housing owners aggressively hunting for residents.
I don’t get the impression that there are tons of residential housing units sitting empty in high demand areas (excluding seasonal vacation areas, trophy properties of the rich, and stuff caught in rebt control purgatory)
AirBnB "investment properties", for example, are still clogging up a lot of areas that have tourist flows.
Some of the residential apartment units, for example, are playing pricing games with rental prices vs occupancy because they can blame it on "pricing software" right now.
Ehh, take San Francisco there are like ~6,000 Airbnb listings (let’s assume they’re all dedicated spec properties) if you put those all on the market, that’d be like be like 1.5 months of inventory, you might make a dent that month, but you’re not moving the needle…
I think in the case of property, multiple supply/demand equilibriums are possible.
Land is a finite resource and rents way exceed mortgage repayments. I think there is a way to encourage the supply of rental in a scenario where they hold less quantities of land.
Small city resident checking in here, 1br apartments are going for $1500/mo on average here, and we're considered an extremely affordable place to live. The average person I know carrying a mortgage has a payment below that for much more living space.
What I would say we're missing is condominiums in the city center. Lots of apartments, fewer places to own in the inventory of downtown housing.
Great. So now I will have to pay higher rent to cover this ridiculous tax. "Then you can buy a house" you will say. But I don't want to. I just want to rent, and I don't want to be forced into buying just because other people are consumed by envy whenever they see a landlord making money.
People usually own multiple properties (outside of main home/vacation home, at least) to rent them to others. So they will just pass that cost to their renters, and make rent more expensive.
Although I guess there could be some number of properties where that becomes untenable as well.
If they could simply "pass that cost to their renters" why wouldn't they just raise rents to that level now, absent any tax increase?
The point of this progressively increasing tax would be to raise the landlord's costs to the point where the market actually cannot bear a rent increase--which would disincentivize using the property as an investment.
Presumably it's a coordination problem. If everyone raises rent you can too. If your rent is abnormally high you'll either have a hard time finding tenants or get abnormal tenants.
But in this scheme, not every landlord will have the increased tax and thus need to raise rent--only the ones with many properties. So that behavior becomes disincentivized.
It encourages supply and liquidity in the market. Individuals will see an opportunity to undercut the large investors if they're hoarding property, so will build new property if they can't get their hands on existing properties. And if it is no longer feasible they're likely to sell rather than hoard for property appreciation.
Quantity and value of properties. Which also means a wealth tax. To be clear I'm 100% in favour of this.
The current economic trickle-up system is starting to cause serious problems. Large sections of populations everywhere are increasingly shut out of the capitalist system because they do not have ANY access to capital.
But does it matter? The way housing problems were always fixed was very simple and without any kind of tax: with the government building social housing, allocated according to social principles (you pay the same, but the size of the apartment is determined by the number of kids you have). A LOT of non-luxury housing. This has nearly stopped. These buildings were famously bad. First, they tended to be unfair and violate building codes, they were government projects (ie. cost a lot more than a luxury housing development despite being much worse), and since houses got allocated by the government to vulnerable groups, they tended to have safety issues in the first few years they existed.
But they fixed housing. A decade or so after they were built and things became somewhat stable around them.
The problem with tax, and any kind of economic system is very simple. Capitalism and communism, and the more creative options like mercantilism or militarism, we can argue about them for a long time, but fundamentally they divide up existing properties. Nothing more. We can use these systems to choose WHO is homeless, but they cannot lower the number of homeless.
I agree. Its not a problem free solution but its the only one that seems to be effective at reducing homelessness and increasing affordability.
Post WW2 in the UK the gov't built a lot of social housing that was successful. Sure there were some failures too (eg tower blocks), but I believe those were built much later.
I thought the vacant homes were in the "thousands", let's say 10k, for a city like New York. Most of these are uninhabitable. I mean, it's sad and public and horrible, but it certainly isn't going to solve homelessness. They're a drop on a hot plate.
Who wants to rent? I imagine most would opt to own instead. Rent is certainly far higher than a mortgage would be, which makes little sense if you're trying to encourage ownership (as often is the story about the american dream)
- deal with selling my investment every time I move
And that includes me. I want to rent. I want the landlord to take care of all that crap for me. And I'm tired of all these people complaining about it.
Yes, a nonprofit group running/developing a housing area and renting to its members is much nicer than having to own at least a condo and then dealing with a bunch of bank/lawyer/realtor nonsense every time you want to move.
I don't want to be a member of a non profit housing group. Sounds like an HOA but made worse by the sanctimony and lack of incentives of people who work for non profits. I just want to hand over my money to a landlord and not think about it. My only considerations are what I pay and what I get in return. How much the landlord is making isn't at all relevant to me.
That won't fix anything. Many rentals are apartment buildings and are built/owned by large companies. You would effectively make the situation worse because individuals wouldn't be able to build high density housing if they're only allowed one unit.
Controversial opinion, but corporate landlords tend to be better than individual landlords because it's impersonal and it's harder to hide. They also have different tax treatment.
> individuals wouldn't be able to build high density housing
Who exactly has (a) enough money to build an apartment block and (b) not enough to put it in a corporate wrapper? (Admittedly the wrapper problem is a serious issue for any kind of rationing!)
> Controversial opinion, but corporate landlords tend to be better than individual landlords because it's impersonal and it's harder to hide
Best of both worlds: cooperative rental companies. Renters control everything collectively as a non-profit. They employ the custodian(s) and vote on what to invest any excess capital into. With this it means you're only paying as much as needed to maintain the buildings, your utilities, and saving up for larger renovations.
I've lived in multiple apartments organized like that, and frankly it beats every corporate/individual landlord I've been attached to.
The world has survived most of its existence without needing holiday lets.
Because it has hotels.
Hotels that do not take up residential properties and pay appropriate taxes, etc. and prevent overtourism whixh has become one of the biggest issues in most tourist places.
You can eliminate holiday let’s and the world will do just fine. Any legitimate loss will be minor.
Exactly. There are some places in the world that only rich people able to purchase multi million dollar houses should be allowed to be. We'll allow a few proles in to work for us and put them in subsided housing away from us so they know their place.
The only problem is these pesky single digit millionaires thinking they can somehow come here to our neighborhood for a month. I paid good money to live here so I wouldn't have to be around those upjumped peasants, but now airbnb rentals are letting them in by the thousands and ruining it. If you can't pay $1000 a night for a hotel, you're not the sort that belongs here. We'll call it "overtourism" to make it seem like they're the problem and not our own insufferable snobbery.
I do think we still need to build more (correctly sized) housing, counteract urbanization, provide social housing, and I'm in favor of rent control in general. So don't get me wrong, I don't think progressive tax will solve the problem on its own. That being said:
Higher taxes could lead to higher rents, but that stops working once the supply of people willing to pay said higher rent is exhausted. At some point landlords won't be able to rent out their place with a profit, at which point you have 2 options: Leave it empty (which should also be illegal, IMO) or sell it (to people who would otherwise have to rent).
It could be that there is a potential never-ending supply of rich people wanting to pay rent to live in a place with ever-increasing rent and the gentrification that comes with it, but it seems unlikely to me.
In the Netherlands there were recently a set of tax changes increasing taxes on house ownership, which caused companies to sell apartments en mass. Housing prices dipped for a little bit, rent (in the private market) went up, but more people own their own place now. This is the direction you want to go, I think.
...or just build enough housing, that whoever wants to buy it, can buy it at some normal percentage above construction costs, and enough rental properties exist, that landlords have to lower the prices of rent to get someone to live there.
If you're stuck at a "pay way too much for rent" or "commute for 3 hours every day" choice, and if you don't take the too expensive apartment, there are 10 other people interested in it, it's a pretty shitty situation to be in... and here in Ljubljana Slovenia this is happening just now (college starting soon, students looking for apartments).
Leaving apartments empty is not worth it, since you still have to pay for monthly costs (power, water, heating, even if empty), and the only way to be worth it is, if the price of the apartment rises higher than the monthly costs.. and that is only true if (almost) no new apartments are being built. If we built enough new apartments the prices of used one would go down, making apartments a bad investments for speculators.
Yes let's trap people in apartments they can never move from and force newcomers to pay excessive rents to cover it. Also let's give landlords an incentive to try to make it as unpleasant for those long term tenants as possible.
And of course we will need an expensive and unaccountable bureaucracy to manage all the inevitable conflicts of interest. But it's a small price to pay to avoid the horror of building enough housing units to match population growth.
If you have enough realestate, there's no need for rent control, because landlords will have to lower prices to get anyone to stay in their apartments, and empty apartments are still a huge cost to the owner. High costs of rent and (buying) houses is because there's not enough supply in the first place.
That policy has been tried for 50 years and all we've seen (and the topic of this thread) is prices gone higher and higher, and properties become more and more consolidated under megacorporations.
50 years ago, this place where I live was a socialist country and we built HUGE apartment building neighbourhoods (literally thousands of apartments) + all the infrastructure needed (schools, kindergardens, stores, parks,...).
After 1991 all of this has stoped.
I don't know where you are from, but when was the last time you guys built a new neighbourhood for 10, 20 thousand people to live in? Because i've been all over both always-capitalist and former-socialist countries (mostly europe), and most of them are old with just a few newer buildings, mostly replacing the demolished old ones. It really doesn't matter, slovenia (my home), or germany... you see a bunch of large apartment blocks built in the same style, for many many people to live in, and you just know it was built somewhere between 1960s and late 1980s, and not after.
it should be noted that until the 1990s the population of vienna has actually been slowly declining (from 2 million more than 100 years ago to 1.5-1.6 million) and most projects before then were more likely needed because a lot was damaged in the world wars. but in the last few decades vienna has seen unprecedented growth, now reaching almost 2 million inhabitants again. consequently in the last 20 years several new building projects have been initiated. the ones i linked are just a few examples. i keep finding out about more as i search.
You're assuming the market will bear the higher rents. If that is true, why aren't rents already at that higher level? Not all costs can simply be "passed on to customers" if they won't bear the increase.
Single-payer. One government agency is permitted to purchase construction of additional units, and also manage the long-term rental (pricing set at auction) of those units in a rent-to-own model, where "own" means the right to live in that unit rent-free until you die, at which point control reverts to the government agency, combined with laws that forbid owning/renting multiple residences. Add in some allowances like giving neighbors right-of-first-rent so that rich people can combine units, some carveouts like keeping short-term hotels private, but basically, yeah, single-payer.
This is sort of how social housing used to work in the UK ("council houses"), but with additional restrictions on private ownership that are politically very hard.
> right to live in that unit rent-free until you die
This is very bad for labour mobility. It's a hukou system for retirees.
> This is very bad for labour mobility. It's a hukou system for retirees.
This is unfortunately a political requirement for passage. There are very, very few people 60+ who have lived in the same place for 20+ years who are willing to leave their houses, and most who do are dragged into nursing homes only because they are no longer physically capable of taking care of themselves.
The rent-to-own period can and should be quite long, like 30-40 years, similar to a mortgage. But the quality of "nobody can take my property away from me" is quite strongly felt, and not one that you can really take away from people. Any radical housing reform must respect that.
Wow! That's worse than the CCP. I thought that all these other ideas on this thread to basically make everybody buy instead of rent were bad. But to force everybody to rent from the government is literally the worst housing arrangement idea I have ever heard.
Taxation and regulation. Not very hard to limit who can buy property (forbidding large funds and overseas buyers, for instance), and how much taxes they pay on non-primary residences.
It really is high time there is some serious regulation around home ownership, especially as an investment vehicle.
I would even say this is an existential issue for our current civilizational model - the unaffordability of housing is contributing to demographic decline globally.