5 ms·

It sounds nice, but the real question is why are people letting these building sit empty. There is probably a good reason for it. Maybe some renter protection l

It sounds nice, but the real question is why are people letting these building sit empty. There is probably a good reason for it. Maybe some renter protection laws that went too far?

mey 8y ago
More likely it's worth it to them to keep rates high and limit supply.
- adrianratnapala 8y ago
  So all the landlords in Bercelona conspired to do this somehow?
  - deleted 8y ago
    [deleted]
  - baddox 8y ago
    Right, it seems like this only works if they conspire or if there are large property holders. Maybe it’s the latter? If I own two houses and left one empty it certainly wouldn’t change the total supply enough to comeback out ahead.
    - jonfw 8y ago
      Or, this doesn't work. Such a conspiracy would easily be covered by anti-monopoly laws in the US, I'm sure that there would be some equivalent law in Spain. The real reason buildings would stay vacant is either ownership attempting to charge above market for rent, or land speculators who are looking to hold and flip, without developing it enough so it can be used in the meantime.
      - bsanr2 8y ago
        How strictly and often are those laws enforced? I don't think anyone is suggesting that they gather together in a back-alley kitchen to talk shop with the Joker. Rather, it's not unreasonable to think that many of the people involved in an area's real estate market are connected, socially, and share their independent strategies in the course of socializing.
        barry-cotter 8y ago
        I doubt property ownership is concentrated enough for this to be possible. Tacit collusion can work with a duopoly but by the time you get to five participants in a market it doesn’t work unless cartel agreements are legally enforceable and I doubt there are less than 5,000 residential property owners in Barcelona.
        bsanr2 8y ago
        I think you're missing the point. It's not collusion, it's simple socialization. But it's inherent in the station of being a property owner to want to extract as much out of one's property as possible, and through this simple socializing, ideas about what most effectively achieves that aim can spread through the networks of interested parties while largely remaining inside of them.
      - logseman 8y ago
        There doesn't have to be a "conspiracy" when the incentives of several powerful institutions with a lot of real estate property (banks, Church, big families with relatives in the Town Hall, regional and national parliament) align like that.
- conanbatt 8y ago
  A) Buy property: rent it out. B) Buy another property: sit it empty C) First property rent is higher than the rent of 2 properties
forkLding 8y ago
Probably makes more sense for these companies to reduce supply and rent for a higher price than have to rent or provide a lower price to renters. Speaks more to the market structure and power of both sides here.
- jonfw 8y ago
  I really doubt that landlords have conspired like this. Not sure what monopoly legislation looks like in Europe but I doubt this behavior would be legal. The real reason is to economically disencentive land speculators holding uninhabitable land, who were planning on flipping it without developing it after several years.
  - forkLding 8y ago
    Don't think it's collusion, it is probably just the reality of things. I've noted that my original comment made it sound like this was insidious collusion but what I mean is that it is likely just the stark reality.
    - jonfw 8y ago
      If there is no market collusion or abuse of monopoly, than there is absolutely no way it makes economic sense to withhold properties from the market to inflate the market. If you have a minority market share you won't be able to make up for the lost revenue, because the majority of the rent inflation is just going to be recognized by the other parties.
em3rgent0rdr 8y ago
It seems to me that the speculators are legitimately communicating useful information, and fining them is hampering that communication and discourages other investors from building more housing. The useful information that high priced vacant housing communicates to me is that there is an anticipation of significantly higher future demand that isn't satisfied by current supply. That should signal for others to build more housing, as there is a lot of money to potentially be made. Or it could be signaling that there are too many things hampering construction of new housing.
nickparker 8y ago
When I've seen these discussions before the two big factors cited are: * Real estate investors can borrow against the long term income of their properties, and often value that above the short term rents. They also tend to be highly leveraged to build the next project. This creates situations where high vacancies and poor returns are worthwhile because they can pretend they'll fill the building at their price eventually, and therefore borrow against the building as though it would return that price X all their units X however many years. * A lot of people seem to think (I haven't dug into the true scale of this) that enormous amounts of money from China is being parked in Western real estate as some sort of protection against seizure by the government.
- hannasanarion 8y ago
  Not just China, but Arabia and Russia too. The Manhattan Skyline is increasingly defined by enormous residential skyscrapers with condos that sell for hundreds of millions of dollars, and sit empty year-round.
- bobthepanda 8y ago
  It doesn't need to be a large amount of money to meaningfully impact the market, because housing is so illiquid. Most people are not moving at any given time.
deleted 8y ago
[deleted]
deleted 8y ago
[deleted]
minikites 8y ago
You're of the opinion that the power balance in the landlord/tenant relationship is biased in favor of the tenant?
- conanbatt 8y ago
  It is on rent control.
- refurb 8y ago
  It absolutely is in places like SF.
danans 8y ago
I can only speak for my area (in California), but in many cases the properties are owned outright (no loan), and have their property taxes essentially fixed at rates that were set decades ago due to Proposition 13, with only small adjustments thereafter. Therefore, the owners have little imperative to offer the properties for rent, with all the associated hassles, to meet their limited expenses. The properties are often poorly maintained for this reason. They can instead treat them as stores of value, which they might even be able to leverage into cash flows via other financial instruments. I think this is more the case for commercial properties than residential, but the problem exists to a degree in the residential market also.
- conanbatt 8y ago
  If they bought the propery decades ago and never rented it, it was definitely rent control. Otherwise they lost a bunch of money.
  - danans 8y ago
    Not likely. If the property was never rented in the first place, then there is no rent control. In SF, rent control resets to market rates automatically when a tenant moves out, and doesn't apply to single family homes or condominiums. An unoccupied apartment can be leased at market rates.
bprieto 8y ago
This is exactly the case. Here in Spain it takes months, even a year to get a judge to evict a tenant that has stopped to pay rent. In the meantime, you need to keep paying for utilities or you will be fined, not the person not paying their rent. Even when you get them out, you could find a destroyed property, just for the sake of it, and you have to pay for the repair work. So just one stroke of bad luck with a tenant will make you lose years of profits. The laws are extremely weighted in favour of the tenant: there is a minimun contract of five years, that the tenant can broke just telling the renter a month before, but the renter can't. Just a few weeks ago, the government approved a new law so if the renter is a company and not an individual, the minimum contract period is 7 years, and in this time you can only rise your price to keep with the official inflation index. So basically investors are tying themselves for seven years with these contracts. Of course they have the option to sell, but selling a property with a tenant that has the right to live there for years with a fixed price is difficult, so you'll need to sell for a lower price. At the end all of this regulations makes the renters very careful, so they prefer to have their properties empty or wait months to find a suitable tenant. And that means that the price is higher and only people who can show they have an stable high paying job are able to rent.
- alexgmcm 8y ago
  And yet here in BCN the market is crazy. The agency parasites are the worst - charging 10% of the annual rent just for giving you the keys and printing a copy of the contract. I was fortunate enough to be able to rent my flat from a family friend, who was afraid of okupas if it was left empty. That said I live far-out from the centre (which I prefer) and it is still much more expensive than when I arrived just 4 years ago.

It sounds nice, but the real question is why are people letting these building sit empty. There is probably a good reason for it. Maybe some renter protection laws that went too far?

mey 8y ago

More likely it's worth it to them to keep rates high and limit supply.

adrianratnapala 8y ago
So all the landlords in Bercelona conspired to do this somehow?
- deleted 8y ago
  [deleted]
- baddox 8y ago
  Right, it seems like this only works if they conspire or if there are large property holders. Maybe it’s the latter? If I own two houses and left one empty it certainly wouldn’t change the total supply enough to comeback out ahead.
  - jonfw 8y ago
    Or, this doesn't work. Such a conspiracy would easily be covered by anti-monopoly laws in the US, I'm sure that there would be some equivalent law in Spain. The real reason buildings would stay vacant is either ownership attempting to charge above market for rent, or land speculators who are looking to hold and flip, without developing it enough so it can be used in the meantime.
    - bsanr2 8y ago
      How strictly and often are those laws enforced? I don't think anyone is suggesting that they gather together in a back-alley kitchen to talk shop with the Joker. Rather, it's not unreasonable to think that many of the people involved in an area's real estate market are connected, socially, and share their independent strategies in the course of socializing.
      - barry-cotter 8y ago
        I doubt property ownership is concentrated enough for this to be possible. Tacit collusion can work with a duopoly but by the time you get to five participants in a market it doesn’t work unless cartel agreements are legally enforceable and I doubt there are less than 5,000 residential property owners in Barcelona.
        bsanr2 8y ago
        I think you're missing the point. It's not collusion, it's simple socialization. But it's inherent in the station of being a property owner to want to extract as much out of one's property as possible, and through this simple socializing, ideas about what most effectively achieves that aim can spread through the networks of interested parties while largely remaining inside of them.
    - logseman 8y ago
      There doesn't have to be a "conspiracy" when the incentives of several powerful institutions with a lot of real estate property (banks, Church, big families with relatives in the Town Hall, regional and national parliament) align like that.
conanbatt 8y ago
A) Buy property: rent it out. B) Buy another property: sit it empty C) First property rent is higher than the rent of 2 properties

forkLding 8y ago

Probably makes more sense for these companies to reduce supply and rent for a higher price than have to rent or provide a lower price to renters. Speaks more to the market structure and power of both sides here.

jonfw 8y ago
I really doubt that landlords have conspired like this. Not sure what monopoly legislation looks like in Europe but I doubt this behavior would be legal. The real reason is to economically disencentive land speculators holding uninhabitable land, who were planning on flipping it without developing it after several years.
- forkLding 8y ago
  Don't think it's collusion, it is probably just the reality of things. I've noted that my original comment made it sound like this was insidious collusion but what I mean is that it is likely just the stark reality.
  - jonfw 8y ago
    If there is no market collusion or abuse of monopoly, than there is absolutely no way it makes economic sense to withhold properties from the market to inflate the market. If you have a minority market share you won't be able to make up for the lost revenue, because the majority of the rent inflation is just going to be recognized by the other parties.

em3rgent0rdr 8y ago

It seems to me that the speculators are legitimately communicating useful information, and fining them is hampering that communication and discourages other investors from building more housing. The useful information that high priced vacant housing communicates to me is that there is an anticipation of significantly higher future demand that isn't satisfied by current supply. That should signal for others to build more housing, as there is a lot of money to potentially be made. Or it could be signaling that there are too many things hampering construction of new housing.

nickparker 8y ago

When I've seen these discussions before the two big factors cited are: * Real estate investors can borrow against the long term income of their properties, and often value that above the short term rents. They also tend to be highly leveraged to build the next project. This creates situations where high vacancies and poor returns are worthwhile because they can pretend they'll fill the building at their price eventually, and therefore borrow against the building as though it would return that price X all their units X however many years. * A lot of people seem to think (I haven't dug into the true scale of this) that enormous amounts of money from China is being parked in Western real estate as some sort of protection against seizure by the government.

hannasanarion 8y ago
Not just China, but Arabia and Russia too. The Manhattan Skyline is increasingly defined by enormous residential skyscrapers with condos that sell for hundreds of millions of dollars, and sit empty year-round.
bobthepanda 8y ago
It doesn't need to be a large amount of money to meaningfully impact the market, because housing is so illiquid. Most people are not moving at any given time.

deleted 8y ago

[deleted]

deleted 8y ago

[deleted]

minikites 8y ago

You're of the opinion that the power balance in the landlord/tenant relationship is biased in favor of the tenant?

conanbatt 8y ago
It is on rent control.
refurb 8y ago
It absolutely is in places like SF.

danans 8y ago

I can only speak for my area (in California), but in many cases the properties are owned outright (no loan), and have their property taxes essentially fixed at rates that were set decades ago due to Proposition 13, with only small adjustments thereafter. Therefore, the owners have little imperative to offer the properties for rent, with all the associated hassles, to meet their limited expenses. The properties are often poorly maintained for this reason. They can instead treat them as stores of value, which they might even be able to leverage into cash flows via other financial instruments. I think this is more the case for commercial properties than residential, but the problem exists to a degree in the residential market also.

conanbatt 8y ago
If they bought the propery decades ago and never rented it, it was definitely rent control. Otherwise they lost a bunch of money.
- danans 8y ago
  Not likely. If the property was never rented in the first place, then there is no rent control. In SF, rent control resets to market rates automatically when a tenant moves out, and doesn't apply to single family homes or condominiums. An unoccupied apartment can be leased at market rates.

bprieto 8y ago

This is exactly the case. Here in Spain it takes months, even a year to get a judge to evict a tenant that has stopped to pay rent. In the meantime, you need to keep paying for utilities or you will be fined, not the person not paying their rent. Even when you get them out, you could find a destroyed property, just for the sake of it, and you have to pay for the repair work. So just one stroke of bad luck with a tenant will make you lose years of profits. The laws are extremely weighted in favour of the tenant: there is a minimun contract of five years, that the tenant can broke just telling the renter a month before, but the renter can't. Just a few weeks ago, the government approved a new law so if the renter is a company and not an individual, the minimum contract period is 7 years, and in this time you can only rise your price to keep with the official inflation index. So basically investors are tying themselves for seven years with these contracts. Of course they have the option to sell, but selling a property with a tenant that has the right to live there for years with a fixed price is difficult, so you'll need to sell for a lower price. At the end all of this regulations makes the renters very careful, so they prefer to have their properties empty or wait months to find a suitable tenant. And that means that the price is higher and only people who can show they have an stable high paying job are able to rent.

alexgmcm 8y ago
And yet here in BCN the market is crazy. The agency parasites are the worst - charging 10% of the annual rent just for giving you the keys and printing a copy of the contract. I was fortunate enough to be able to rent my flat from a family friend, who was afraid of okupas if it was left empty. That said I live far-out from the centre (which I prefer) and it is still much more expensive than when I arrived just 4 years ago.