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Why wouldn't everyone's rent increase by whatever that tax is? There's already an incentive to create additional density, money. More units, more money. If t

Why wouldn't everyone's rent increase by whatever that tax is? There's already an incentive to create additional density, money. More units, more money. If there's some tax that the owner also has to account for that changes nothing. It's no different than any other increase in overhead. It just gets passed on.

scotty79 8y ago
> Why wouldn't everyone's rent increase by whatever that tax is? Because the tax is progressive, which means is not equal for all landlords, which means if big landlords increased their rent by their tax then nobody would rent from them because smaller landlords would have smaller rents thanks to smaller tax. This way large landlords no longer find owning real estate profitable and relocate their capital away from real estate market towards stock market or wherever where it is hopefully less harmful to other players. Less capital with same number of units drives the price down. More people can afford to own vs rent, so they buy and rent drops further because of lower demand. Ultimately everything lands on new equilibrium of lower rents with government having nice pile of cash on their hands free to use it to whatever new public housing development it fancies, driving prices even lower by increasing supply.
- tryptophan 8y ago
  You seem to have the misconception that rents are set by individual owners(a large company, or 1 house/person landlord). In actuality, rents are set by the rental market overall, governed by supply and demand. It doesn't matter if 500 homes to rent are owned by 2 or 200 people. A tax like that would just make rents increase to X+Y for units owned by large landlords, where Y is the new tax cost. X would not change, making the policy achieve exactly nothing.
  - scotty79 8y ago
    You seem to have the misconception that rents are set by supply and demand that are free variables. In reality rents are tightly bound to the mortgage. Rent for a property is roughly the same as mortgage for the same property. It can't be much higher because otherwise people would just buy instead of rent. It can't be much lower because that would mean that property is in unattractive spot which drives the price of property down to match. > In actuality, rents are set by the rental market overall, governed by supply and demand. It doesn't matter if 500 homes to rent are owned by 2 or 200 people. In actuality price of a thing depends on amount of units of a thing and amount of capital that people interested in the thing have. If you drive out some amount of capital from some market the prices will drop. As properties prices drop, rent drops. > A tax like that would just make rents increase to X+Y for units owned by large landlords, where Y is the new tax cost. X would not change, making the policy achieve exactly nothing. It would be X+Y for large land lords but X+y for small landlords (where y<Y because the tax is progressive). So large landlords wouldn't find much demand for their properties, which would force them to sell to individuals and smaller landlords. Which is exactly the point of the tax.

scotty79 8y ago

> Why wouldn't everyone's rent increase by whatever that tax is? Because the tax is progressive, which means is not equal for all landlords, which means if big landlords increased their rent by their tax then nobody would rent from them because smaller landlords would have smaller rents thanks to smaller tax. This way large landlords no longer find owning real estate profitable and relocate their capital away from real estate market towards stock market or wherever where it is hopefully less harmful to other players. Less capital with same number of units drives the price down. More people can afford to own vs rent, so they buy and rent drops further because of lower demand. Ultimately everything lands on new equilibrium of lower rents with government having nice pile of cash on their hands free to use it to whatever new public housing development it fancies, driving prices even lower by increasing supply.

tryptophan 8y ago
You seem to have the misconception that rents are set by individual owners(a large company, or 1 house/person landlord). In actuality, rents are set by the rental market overall, governed by supply and demand. It doesn't matter if 500 homes to rent are owned by 2 or 200 people. A tax like that would just make rents increase to X+Y for units owned by large landlords, where Y is the new tax cost. X would not change, making the policy achieve exactly nothing.
- scotty79 8y ago
  You seem to have the misconception that rents are set by supply and demand that are free variables. In reality rents are tightly bound to the mortgage. Rent for a property is roughly the same as mortgage for the same property. It can't be much higher because otherwise people would just buy instead of rent. It can't be much lower because that would mean that property is in unattractive spot which drives the price of property down to match. > In actuality, rents are set by the rental market overall, governed by supply and demand. It doesn't matter if 500 homes to rent are owned by 2 or 200 people. In actuality price of a thing depends on amount of units of a thing and amount of capital that people interested in the thing have. If you drive out some amount of capital from some market the prices will drop. As properties prices drop, rent drops. > A tax like that would just make rents increase to X+Y for units owned by large landlords, where Y is the new tax cost. X would not change, making the policy achieve exactly nothing. It would be X+Y for large land lords but X+y for small landlords (where y<Y because the tax is progressive). So large landlords wouldn't find much demand for their properties, which would force them to sell to individuals and smaller landlords. Which is exactly the point of the tax.