3 ms·

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 rent

• 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.