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Landlords are often portrayed as mutton-gobbling land barons both in the media and the comment section on Hacker News. I know a little bit about both UK and US

Landlords are often portrayed as mutton-gobbling land barons both in the media and the comment section on Hacker News. I know a little bit about both UK and US rental markets and have a slightly different perspective. The common threads are that any economic harm which befalls a landlord is something they should have been prepared for, and that they're better off than most people because they have a second property.[1] The frequent corollary of this is that tenants are justified in taking advantage of landlords wherever possible, because the system is somehow unfair on them.[2] In part this is because rental units are an asset class leveraged by both sophisticated and unsophisticated investors. Multi-family home operators with huge balance sheets and economic resilience are one part of the equation, but a lot of rental stock is in the hands of folks like us. Which is to say: they're consumers. They certainly understand risk and cashflow through the simplistic lens of voids and arrears, but what we're seeing here is analogous to the suspension of trading on a stock market, or a massive breach of MMMR in calling a short. It's not a simple case of "you may lose a little profit", it's "the rules of the game have been changed in a way nobody could have predicted." If you don't believe tenants ought to have seen this coming, then there's really no reason to believe landlords should have, either. It's forgivable that policymakers have screwed this up, but it should be simple to correct: banks have sufficient liquidity (and the hope of a bailout if they don't) to withstand the immediate shock. Therefore renters who can demonstrate that they are affected by coronavirus should receive clemency from their landlords, who should receive clemency from their lender, who should receive clemency from the government if required. (There is an uncomfortable reality that keeping folks in unproductive jobs is not all that useful, so furlough schemes and other economic relief for those impacted by coronavirus must end in order to force the affected portion of the workforce into productivity, but that's another conversation for another time.) The ire directed at landlords also often supposes that they are responsible for high rents, and usually this is based on the premise that if they sold their non-owner occupied properties, the excess liquidity would reduce house prices and enable more people to move from renting to home ownership. I have never seen a single study which supports the view that landlords do anything other than provide a necessary service at a price the market bears. Responsibility rests with local authorities and the federal government to create affordable homes and combat the fact that, for example, the United Kingdom has set targets for the creation of new houses for more than 40 years, and has failed to hit them each year for the last 40. They acknowledge the solution to the problem (introducing affordable homes into the market, rather than forcing landlords to sell - a carrot, not a stick which benefits some consumers and hurts others), but do not deliver. I'll nope out of this thread if someone mentions rent controls. [1] https://news.ycombinator.com/item?id=24079791 https://news.ycombinator.com/item?id=24079791 [2] https://news.ycombinator.com/user?id=throwaway2245 https://news.ycombinator.com/user?id=throwaway2245

salawat 6y ago
>I have never seen a single study which supports the view that landlords do anything other than provide a necessary service at a price the market bears. s/market bears/landlord demands and tenants rearchitect their life, dreams, and expectations to accommodate. I hate this 'market bearing' weasel word. It isn't some intangible super entity. It's everybody. Everybody is out to get a chunk out of everyone else, and someone ends up on the bottom of it all, and right now, the people getting dog piled are a shrinking demographic expected to fuel the same growth metrics as a population cohort that for the majority of their lives were in a state of perpetual economic growth. At least til people started screwing with the rules of the game in the 80's, and wage stagnation/theft went through the roof. The nest eggs getting cashed in are valued against the expectation they still do have value to the rest of society at large, but most of the rest of society aren't even savvy or vested enough to absorb that except through employment based policy collusion to ensure that some chunk of compensation re-nters the market in the form of investment through 401k. Every payday a company writes another company a check out of their employees payroll, and thanks to wage theft/stagnation, that's even gotten vanishingly small. Home ownership is down as a result, and becoming an increasingly removed dream due to real estate being seen as a speculation vehicle. I can buy hoping out on Rent Controls, but for God sake, your landlords are as much a symptom of the prevailing ills of an economic system dependent on extracting blood from a stone and returning as little as possible as anything else.
- georgespencer 6y ago
  > s/market bears/landlord demands and tenants rearchitect their life, dreams, and expectations to accommodate I think what you're suggesting here is that housing is such a fundamental requirement that people make life-deranging decisions in order to have it, which creates a distorted view of what the market will sustain. Perhaps similar to healthcare in the US. Is that right? > I hate this 'market bearing' weasel word. It isn't some intangible super entity. It's everybody. It sounds like it's a really emotive term for you, but it's also the precise economic term. There are of course human and societal costs of market corrections, but that doesn't mean that this is not a market. The rest of that thought you expressed seemed to stray into some generalised views of the state of the market. I'll just address this point: > Home ownership is down as a result, and becoming an increasingly removed dream due to real estate being seen as a speculation vehicle. When we segment homeownership levels by year of birth, there is a really interesting trend. Here's the peak homeownership rate in the UK for folks born in four year increments since 1960 onwards:[1] 1960-64: 76% 1965-69: 72% 1970-74: 66% 1975-79: 59% 1980-84: 43% 1985-89: 26% The first four series appear to be declining (entering care/death) or flattening, whilst the others continue to grow. The shape of the curve is shallower for each successive year since 1965-69. We treat the decline of homeownership as if it's a relatively new problem, but the warnings have been around us for decades. Consider the United Kingdom: a relatively small set of islands. In 1960 (a year of birth which the data suggests has a ~76% homeownership rate in the UK) there were 52m inhabitants of this island. In 2020 that number is 67m. In the next ten years it'll likely grow to 70 million according to the ONS. One contributing factor is that people are living longer, healthier lives. Average life expectancy for a UK national born in 1960: 70 years. Born today? 81. For most of the census data available it was <50[2]. Decisions have been taken on many, many things, with a misunderstanding of how long it's possible for people to live for. This is not a market which will simply "clear" if the right economic tweaks are made. There are not enough houses. London has 9m people living in ~4m houses. Portals here list 70k-80k units per month and I suspect the average tenancy agreement is c. 15 months, implying ~1.3m rental units. There are around 4m people in inner London, and 5m people in outer London. Looking at some reasonable-seeming data for age demographics[3], if we exclude everyone under the age of 19, there's 6.7m adults living in London who need to live somewhere. Redistributing the rental stock isn't going to help. Reliance on the private sector solving housing issues, particularly in affluent cities and overcrowded countries, is a total misunderstanding of the problems we need to solve. In London in 2020 if you are not intent on building housing stock targeting the affluent, then you're going to be outbid and not get the land to build at all. Space is a premium (even more so because of protected views in central London, and institutional resistance to building up/out into green belt land), meaning prices are high. So housing projects must optimise for margin. Attempts at affordable micro-living spaces have been met with resistance from lenders who won't provide mortgages on residential units below a certain square footage. When you do nearly any amount of analysis here, you quickly arrive at a perspective that the failings we have are not solved by the private sector or by landlords, and mom & pop landlords are arguably doing more to protect the interests of renters by retaining units at fairly flat rent CAGR rather than selling plots of land into the hands of developers who build high end apartments. There are many solutions to this problem, but it's genuinely difficult to discuss with folks because the knee-jerk reaction seems to usually be that landlords are evil and capitalism is part of the problem. [1] This is taken from an ESRC/IFS briefing note in 2018: https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf [2] https://www.statista.com/statistics/1040159/life-expectancy-united-kingdom-all-time/ https://www.statista.com/statistics/1040159/life-expectancy-... [3] https://www.trustforlondon.org.uk/data/population-age-groups/ https://www.trustforlondon.org.uk/data/population-age-groups...

salawat 6y ago

>I have never seen a single study which supports the view that landlords do anything other than provide a necessary service at a price the market bears. s/market bears/landlord demands and tenants rearchitect their life, dreams, and expectations to accommodate. I hate this 'market bearing' weasel word. It isn't some intangible super entity. It's everybody. Everybody is out to get a chunk out of everyone else, and someone ends up on the bottom of it all, and right now, the people getting dog piled are a shrinking demographic expected to fuel the same growth metrics as a population cohort that for the majority of their lives were in a state of perpetual economic growth. At least til people started screwing with the rules of the game in the 80's, and wage stagnation/theft went through the roof. The nest eggs getting cashed in are valued against the expectation they still do have value to the rest of society at large, but most of the rest of society aren't even savvy or vested enough to absorb that except through employment based policy collusion to ensure that some chunk of compensation re-nters the market in the form of investment through 401k. Every payday a company writes another company a check out of their employees payroll, and thanks to wage theft/stagnation, that's even gotten vanishingly small. Home ownership is down as a result, and becoming an increasingly removed dream due to real estate being seen as a speculation vehicle. I can buy hoping out on Rent Controls, but for God sake, your landlords are as much a symptom of the prevailing ills of an economic system dependent on extracting blood from a stone and returning as little as possible as anything else.

georgespencer 6y ago
> s/market bears/landlord demands and tenants rearchitect their life, dreams, and expectations to accommodate I think what you're suggesting here is that housing is such a fundamental requirement that people make life-deranging decisions in order to have it, which creates a distorted view of what the market will sustain. Perhaps similar to healthcare in the US. Is that right? > I hate this 'market bearing' weasel word. It isn't some intangible super entity. It's everybody. It sounds like it's a really emotive term for you, but it's also the precise economic term. There are of course human and societal costs of market corrections, but that doesn't mean that this is not a market. The rest of that thought you expressed seemed to stray into some generalised views of the state of the market. I'll just address this point: > Home ownership is down as a result, and becoming an increasingly removed dream due to real estate being seen as a speculation vehicle. When we segment homeownership levels by year of birth, there is a really interesting trend. Here's the peak homeownership rate in the UK for folks born in four year increments since 1960 onwards:[1] 1960-64: 76% 1965-69: 72% 1970-74: 66% 1975-79: 59% 1980-84: 43% 1985-89: 26% The first four series appear to be declining (entering care/death) or flattening, whilst the others continue to grow. The shape of the curve is shallower for each successive year since 1965-69. We treat the decline of homeownership as if it's a relatively new problem, but the warnings have been around us for decades. Consider the United Kingdom: a relatively small set of islands. In 1960 (a year of birth which the data suggests has a ~76% homeownership rate in the UK) there were 52m inhabitants of this island. In 2020 that number is 67m. In the next ten years it'll likely grow to 70 million according to the ONS. One contributing factor is that people are living longer, healthier lives. Average life expectancy for a UK national born in 1960: 70 years. Born today? 81. For most of the census data available it was <50[2]. Decisions have been taken on many, many things, with a misunderstanding of how long it's possible for people to live for. This is not a market which will simply "clear" if the right economic tweaks are made. There are not enough houses. London has 9m people living in ~4m houses. Portals here list 70k-80k units per month and I suspect the average tenancy agreement is c. 15 months, implying ~1.3m rental units. There are around 4m people in inner London, and 5m people in outer London. Looking at some reasonable-seeming data for age demographics[3], if we exclude everyone under the age of 19, there's 6.7m adults living in London who need to live somewhere. Redistributing the rental stock isn't going to help. Reliance on the private sector solving housing issues, particularly in affluent cities and overcrowded countries, is a total misunderstanding of the problems we need to solve. In London in 2020 if you are not intent on building housing stock targeting the affluent, then you're going to be outbid and not get the land to build at all. Space is a premium (even more so because of protected views in central London, and institutional resistance to building up/out into green belt land), meaning prices are high. So housing projects must optimise for margin. Attempts at affordable micro-living spaces have been met with resistance from lenders who won't provide mortgages on residential units below a certain square footage. When you do nearly any amount of analysis here, you quickly arrive at a perspective that the failings we have are not solved by the private sector or by landlords, and mom & pop landlords are arguably doing more to protect the interests of renters by retaining units at fairly flat rent CAGR rather than selling plots of land into the hands of developers who build high end apartments. There are many solutions to this problem, but it's genuinely difficult to discuss with folks because the knee-jerk reaction seems to usually be that landlords are evil and capitalism is part of the problem. [1] This is taken from an ESRC/IFS briefing note in 2018: https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf [2] https://www.statista.com/statistics/1040159/life-expectancy-united-kingdom-all-time/ https://www.statista.com/statistics/1040159/life-expectancy-... [3] https://www.trustforlondon.org.uk/data/population-age-groups/ https://www.trustforlondon.org.uk/data/population-age-groups...