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I believe this is responding to a symptom (vacancies) without addressing its primary cause (land speculation.) Housing is viewed as an investment; speculators c

I believe this is responding to a symptom (vacancies) without addressing its primary cause (land speculation.) Housing is viewed as an investment; speculators capture the value of location and public spending by increasing the rent they charge, but don't add any value themselves, essentially siphoning value out of the community. The result is a boom/bust cycle and unaffordable rents. Disincentivizing vacancies may increase supply and lower prices, but occupied properties still have the same fundamental problem. A land tax on the unimproved value of the land is an elegant solution which incentivizes adding value to property rather than using it to park money. Edit: I'm surprised I'm being downvoted so much - maybe you disagree, but this is at least an attempt to add to the discussion.

lkrubner 10y ago
"without addressing its primary cause (land speculation.)" I don't understand what you mean. We can quibble about the details of this particular tax, but set that aside for a moment. The best way to fight speculation is to put a tax on it. To see what I mean, imagine these 2 scenarios: 1.) There is a country without any land tax. You see a house that you can buy. You believe prices will be 10% higher within one year. Do you buy the house? 2.) There is a country with a 10% annual land tax. You see a house that you can buy. You believe prices will be 10% higher within one year. Do you buy the house? In scenario #1 the house is a good investment. In scenario #2, you would only buy the house if you are going to live in it, or if you can rent it out and make money off of it. In either case, in scenario #2, the house is not vacant. A land tax forces the owners of land to use the land for productive purposes, rather than just holding it.
- anigbrowl 10y ago
  Quite. This system is called Georgism, after the economist who first proposed it.
- bendmorris 10y ago
  Maybe I was unclear, but it sounds like we agree: "A land tax on the unimproved value of the land is an elegant solution which incentivizes adding value to property rather than using it to park money." Vacancies are caused by the fact that we live in scenario #1. Speculators can buy up properties, keep them empty, and reap a financial reward (as long as they time it right) as demand for the location increases.
twoodfin 10y ago
If land speculators don't provide value, than why isn't everyone a successful speculator? Of course, it's because they do provide value: They allow land owners to transform illiquid, risky assets into liquid, reliable cash.
witty_username 10y ago
Nobody complains about speculators on the way down. Speculators do add value by making the market more efficient. For example, if there is going to be a house shortage then speculators will buy it early thus rewarding people for developing houses earlier. Or, if there are too many houses, speculators can short it and bring prices down and so make housing more affordable earlier.
- bendmorris 10y ago
  Is the amount of value speculators capture proportional to the efficiency gains? If there were less or no speculation, what would be the net result?
  - witty_username 10y ago
    > Is the amount of value speculators capture proportional to the efficiency gains? Yes. > If there were less or no speculation, what would be the net result? You would have more housing shortages and more excess housing.
    - bendmorris 10y ago
      >Yes. I'm pretty skeptical, do you have any supporting evidence?
      - witty_username 10y ago
        There might be evidence, but I could not find it in a cursory search. Let us assume constant demand for houses. Suppose a housing shortage is going to happen in 1 year. Speculators will buy houses thus incentivizing construction and lowering prices in the future. The more adverse the shortage (consider supply and demand) the greater the difference in prices between now and 1 year from now and thus the greater the gains of the speculators. Speculators are essentially arbitraging over time. If the speculators incorrectly buy houses when there is excess housing, they will lose money proportional to their mistake.

lkrubner 10y ago

"without addressing its primary cause (land speculation.)" I don't understand what you mean. We can quibble about the details of this particular tax, but set that aside for a moment. The best way to fight speculation is to put a tax on it. To see what I mean, imagine these 2 scenarios: 1.) There is a country without any land tax. You see a house that you can buy. You believe prices will be 10% higher within one year. Do you buy the house? 2.) There is a country with a 10% annual land tax. You see a house that you can buy. You believe prices will be 10% higher within one year. Do you buy the house? In scenario #1 the house is a good investment. In scenario #2, you would only buy the house if you are going to live in it, or if you can rent it out and make money off of it. In either case, in scenario #2, the house is not vacant. A land tax forces the owners of land to use the land for productive purposes, rather than just holding it.

anigbrowl 10y ago
Quite. This system is called Georgism, after the economist who first proposed it.
bendmorris 10y ago
Maybe I was unclear, but it sounds like we agree: "A land tax on the unimproved value of the land is an elegant solution which incentivizes adding value to property rather than using it to park money." Vacancies are caused by the fact that we live in scenario #1. Speculators can buy up properties, keep them empty, and reap a financial reward (as long as they time it right) as demand for the location increases.

twoodfin 10y ago

If land speculators don't provide value, than why isn't everyone a successful speculator? Of course, it's because they do provide value: They allow land owners to transform illiquid, risky assets into liquid, reliable cash.

witty_username 10y ago

Nobody complains about speculators on the way down. Speculators do add value by making the market more efficient. For example, if there is going to be a house shortage then speculators will buy it early thus rewarding people for developing houses earlier. Or, if there are too many houses, speculators can short it and bring prices down and so make housing more affordable earlier.

bendmorris 10y ago
Is the amount of value speculators capture proportional to the efficiency gains? If there were less or no speculation, what would be the net result?
- witty_username 10y ago
  > Is the amount of value speculators capture proportional to the efficiency gains? Yes. > If there were less or no speculation, what would be the net result? You would have more housing shortages and more excess housing.
  - bendmorris 10y ago
    >Yes. I'm pretty skeptical, do you have any supporting evidence?
    - witty_username 10y ago
      There might be evidence, but I could not find it in a cursory search. Let us assume constant demand for houses. Suppose a housing shortage is going to happen in 1 year. Speculators will buy houses thus incentivizing construction and lowering prices in the future. The more adverse the shortage (consider supply and demand) the greater the difference in prices between now and 1 year from now and thus the greater the gains of the speculators. Speculators are essentially arbitraging over time. If the speculators incorrectly buy houses when there is excess housing, they will lose money proportional to their mistake.