4 ms·

How does a fixed supply of land preclude raising the rent?

• marcosdumay 11y ago
  If the supply is fixed, the price will fluctuate only with demand. (But no, the supply isn't really fixed.)
• notahacker 11y ago
  The land value taxers' argument generally works the other way round, arguing that the supply of rental properties actually is artificially constrained by landowners, and that tax on the undeveloped value of the land would push landowners into developing and letting property on their land or selling up to developers, implying more price competition in the rentals market and thus less ability to pass on the tax costs to the end occupant. The fixed supply of land is important only inasmuch as it provides a reason why landowners can be pretty confident their land will appreciate in value in the first place (and in some cases, to a sufficient degree to make the additional revenues achievable from development/rentals in the short term appear relatively trivial). Moreover, if land ownership is highly concentrated then releasing very little of that land for rentals and gradually selling off the highest-value parcels probably is the most effective way of maximising the value of one's dynasty's land portfolio. The argument isn't so much that rents would never go up at all as that the effects of more efficient land use and competition in the rentals market mean that individual occupants of the land wouldn't pay the full value of the tax (and would tend to benefit from commensurate rate reductions on other taxes) How well that argument explains or even fits the facts of land ownership varies hugely by geography.