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Part of the reasoning here is that rentiers are not contributing to wealth creation and therefore their earnings on the rent are parasitic, therefore 'unjust an

Part of the reasoning here is that rentiers are not contributing to wealth creation and therefore their earnings on the rent are parasitic, therefore 'unjust and dysfuctional': "Since it’s a payment for nothing that didn’t already exist, it’s a deadweight cost, and so not only unjust but also dysfunctional for the economy. " The practice of renting exists as an option to owning. By renting, renters can engage in an activity with less up front capital to buying. For example, a contractor building a concrete sidewalk may choose to rent the mixer rather than owning it, so that it's cost is a cost of sale for the service, rather than a fixed cost that requires maintenance, storage and transportation. In that sense, the rental is a component of a larger transaction involving actual work being performed, and not parasitic. Moreover, by offering the mixer for rent, the 'rentier' reduces the total number of mixers that need to be produced, as it is a shared resource to contractors and they each do not need to own their own. The same principle pertains to business. A fast growing startup may know they only need a space for a short time and will grow out of it. So it would make no sense to purchase the property they will inhabit for a short time. The rent they pay is an alternative to mortgage or cash, and it makes sense for their business purposes, which in theory do produce something of value. In the example of home rental, making homes available for rent enables families to live in accommodations that they would not be able to purchase. These accommodations are not without cost to the owner: Taxes, utilities, maintenance, security and administration are all associated costs that rent payments offset. What the rentier provides in most cases, is a better quality of life than the family could have if they were forced to own the property they lived in.

JoeAltmaier 10y ago
There is a value to time that is often discounted in naïve valuations. Why is rent justified? Because using land for a day, and using it for a year have very different values. Its not just land that's being paid for; its land use over time. This raises its ugly head in discussions worldwide. Folks must come to understand that time is truly money.
hueving 10y ago
Unless subsidized or losing money, the rent is more than a mortgage payment would be. If we had low enough transaction costs it would be better if everyone just owned their homes via mortgage for even short time frames.
- moultano 10y ago
  >Unless subsidized or losing money, the rent is more than a mortgage payment would be. That is demonstrably false. Renting is more than a mortgage interest payment would be. Unless you feel like you have some special knowledge about the local real estate market, your capital is likely better off in the stock market.
  - ams6110 10y ago
    Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. Rental real estate works on leverage to a greater degree than is possible with stocks. Most banks won't make loans to invest in the stock market. They will make loans for investment property. So if you have $100,000 you can buy maybe 4 or 5 $100,000 rental properties, and have your tenants pay off the loans. Not as likely that you can take $100,000 and buy $400,000 - $500,000 of stocks, at least not as an unsophisticated individual investor.
    - moultano 10y ago
      >Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. People generally don't buy houses in order to rent them. Usually houses are rented out when the owner is moving and decides to rent it out rather than sell, at which point the owner has a substantial amount of capital in the house.
      - aoeuasdf1 10y ago
        And? Are they supposed to let people use the house for free? It seems like communists are willfully ignorant of the time value of money.
ParrotyError 10y ago
"In the example of home rental, making homes available for rent enables families to live in accommodations that they would not be able to purchase. These accommodations are not without cost to the owner: Taxes, utilities, maintenance, security and administration are all associated costs that rent payments offset. What the rentier provides in most cases, is a better quality of life than the family could have if they were forced to own the property they lived in." In many parts of the UK this just isn't the case any more. There is a serious lack of housing due to many factors (the bigots will tell you it's all the fault of immigration) but the short story is that the competition for rental property is so fierce now that in many places, monthly rent to the private landlord is higher than a monthly mortgage payment would be to buy a similar property. So why don't people just buy? Well, there is a shortage of houses to buy, and you can't usually get a 100% mortgage. You need to put down a substantial cash deposit towards the purchase price of the house, for example 15, 20 and even 25% in some cases. So why don't people just save up for a deposit? Well, if you need to spend £250k on a very modest 3-bedroom house, you are looking at anything from £37.5k plus fees. Housing is so expensive now in relation to average income, that people are effectively priced out of the market forever, unless they win or inherit a lot of money. It is not possible to save that amount in any reasonable time scale. So why not get a second or third job? Maybe they'll work themselves to death before they need that house? Only joking, people have to work long hours at their main jobs nowadays. The contract may say 37.5 hours per week, and that's what you get paid for, but "You're all professionals..."
- ams6110 10y ago
  The answer to this is build more housing. Who or what is preventing that?
  - ParrotyError 10y ago
    All kinds of things. Large organisations (supermarket chains like Tesco) holding onto vast "land banks," new property being bought up and left vacant by foreign investors as fast as it can been build (a big problem in London and Cambridge), construction companies and their investors who want to restrict the supply to keep prices high, a lack of suitable places to build new housing (lack of infrastructure, protected countryside...). Everywhere I look I keep seeing new flats (apartments) being built where offices used to be but they are empty, so it's a bit of a mystery. Maybe these are of the wrong type or these are examples of the ones the foreign investors are buying?

JoeAltmaier 10y ago

There is a value to time that is often discounted in naïve valuations. Why is rent justified? Because using land for a day, and using it for a year have very different values. Its not just land that's being paid for; its land use over time. This raises its ugly head in discussions worldwide. Folks must come to understand that time is truly money.

hueving 10y ago

Unless subsidized or losing money, the rent is more than a mortgage payment would be. If we had low enough transaction costs it would be better if everyone just owned their homes via mortgage for even short time frames.

moultano 10y ago
>Unless subsidized or losing money, the rent is more than a mortgage payment would be. That is demonstrably false. Renting is more than a mortgage interest payment would be. Unless you feel like you have some special knowledge about the local real estate market, your capital is likely better off in the stock market.
- ams6110 10y ago
  Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. Rental real estate works on leverage to a greater degree than is possible with stocks. Most banks won't make loans to invest in the stock market. They will make loans for investment property. So if you have $100,000 you can buy maybe 4 or 5 $100,000 rental properties, and have your tenants pay off the loans. Not as likely that you can take $100,000 and buy $400,000 - $500,000 of stocks, at least not as an unsophisticated individual investor.
  - moultano 10y ago
    >Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. People generally don't buy houses in order to rent them. Usually houses are rented out when the owner is moving and decides to rent it out rather than sell, at which point the owner has a substantial amount of capital in the house.
    - aoeuasdf1 10y ago
      And? Are they supposed to let people use the house for free? It seems like communists are willfully ignorant of the time value of money.

ParrotyError 10y ago

"In the example of home rental, making homes available for rent enables families to live in accommodations that they would not be able to purchase. These accommodations are not without cost to the owner: Taxes, utilities, maintenance, security and administration are all associated costs that rent payments offset. What the rentier provides in most cases, is a better quality of life than the family could have if they were forced to own the property they lived in." In many parts of the UK this just isn't the case any more. There is a serious lack of housing due to many factors (the bigots will tell you it's all the fault of immigration) but the short story is that the competition for rental property is so fierce now that in many places, monthly rent to the private landlord is higher than a monthly mortgage payment would be to buy a similar property. So why don't people just buy? Well, there is a shortage of houses to buy, and you can't usually get a 100% mortgage. You need to put down a substantial cash deposit towards the purchase price of the house, for example 15, 20 and even 25% in some cases. So why don't people just save up for a deposit? Well, if you need to spend £250k on a very modest 3-bedroom house, you are looking at anything from £37.5k plus fees. Housing is so expensive now in relation to average income, that people are effectively priced out of the market forever, unless they win or inherit a lot of money. It is not possible to save that amount in any reasonable time scale. So why not get a second or third job? Maybe they'll work themselves to death before they need that house? Only joking, people have to work long hours at their main jobs nowadays. The contract may say 37.5 hours per week, and that's what you get paid for, but "You're all professionals..."

ams6110 10y ago
The answer to this is build more housing. Who or what is preventing that?
- ParrotyError 10y ago
  All kinds of things. Large organisations (supermarket chains like Tesco) holding onto vast "land banks," new property being bought up and left vacant by foreign investors as fast as it can been build (a big problem in London and Cambridge), construction companies and their investors who want to restrict the supply to keep prices high, a lack of suitable places to build new housing (lack of infrastructure, protected countryside...). Everywhere I look I keep seeing new flats (apartments) being built where offices used to be but they are empty, so it's a bit of a mystery. Maybe these are of the wrong type or these are examples of the ones the foreign investors are buying?