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I’ve talked with a friend in NZ who have recently purchased 5 houses all to rent, all have mortgages, and none in expensive cities (think South Island outside C

I’ve talked with a friend in NZ who have recently purchased 5 houses all to rent, all have mortgages, and none in expensive cities (think South Island outside CHCH and Queenstown). They work full time in Auckland in a business they run. The housing crisis has been this way since at least 2000 or so. It won’t change until: - Stamp duty for buying rentals / converting to rentals, maybe 10-20% - Limit the number of existing residential properties a person can own to 5 (no lower than 3). Maybe allow them to buy more than 5 if they pay a high stamp duty (eg 60%). - No limit to number of new residential properties a person can build (Ie encourage adding new stock to the housing market), so long as it doesn’t involve the demolition of an existing residential property. - Higher buy to let mortgage deposit requirements on existing properties (maybe 60%?) - Higher interest on buy to let mortgages (maybe the govt charges an additional 3% on top of the interest as a form of tax) - Maybe some more draconian stuff like unable to sell a property as a rental if it has been a rental for at least 2 out of the last 10 years. Ie making the only people that could buy it owner-occupiers.

dillondoyle 5y ago
Is there a reason increasing supply wouldn't be an easier solution?
- yardstick 5y ago
  Yes increasing supply will help, and my suggestions encourage increasing supply over turning existing stock into rentals, but if the new supply is all rentals that doesn’t help owner occupiers much. What needs to happen is owner occupiers are given a competitive edge when bidding for a property over a landlord. Hence more taxes and disincentives for buy to let purchasers. So for example a property selling for $1m, what would happen if it actually cost a landlord say $1.5m after taxes, higher interest etc, but an owner occupier would still just have to pay $1m. That gives an advantage to someone who actually needs the home. Edit: Also new supply takes a long time to ramp up, with planning permission, land acquisition, infrastructure, and there are materials shortages (wood especially) and cost overruns rampant at the moment. There is also a potential issue in the quality of supply (see the leaky building crisis in NZ in the 90s, or how small the apartments of the last decade are).
  - IkmoIkmo 5y ago
    > What needs to happen is owner occupiers are given a competitive edge when bidding for a property over a landlord. Hence more taxes and disincentives for buy to let purchasers. A vibrant rental market is a great thing for many reasons (e.g. look up any study on labour mobility). Not sure why we should have tax advantages for home owners and tax disadvantages for the rental market. It's certainly not equitable to the renter class. And there's tons of evidence that home owner tax advantages flow mostly to incumbent home owners who gain the proceeds from any tax advantages spent to help new home owners get into the market.
    - yardstick 5y ago
      Imagine if it was cheaper to buy a house and service the mortgage on it, than to rent. In such a case, is the rental market still a great thing? Yes I agree some rentals are necessary given the practical nature of the housing system. But once they become the cause of people being unable to afford to buy their own home it is an issue that needs addressing.
      - IkmoIkmo 5y ago
        > Imagine if it was cheaper to buy a house and service the mortgage on it, than to rent. In such a case, is the rental market still a great thing? What I'm trying to say is that if the government is manipulating the market by giving tax advantages to the homeowner market, and tax disadvantages to the rental market, that it's not a good way to spend public funds. Home ownership is exactly cheaper because it's so subsidised through various ta breaks. That makes renting more expensive vis-a-vis owning, which hurts the class of people who can't rent or has a different preference around life (e.g. more transient, more mobile, less fixed, travel for work, seasonal work etc). Then concluding 'oh owning is cheaper, but it's less accessible, let's give even more tax breaks and stimulus and make renting even more expensive' only exacerbates the problem, it doesn't solve it.
        yardstick 5y ago
        I’m not sure how charging taxes on landlords is spending public funds that they would have otherwise had if that tax was not present. There’s no loss of public funds here. I’m also not sure how government policies that deprive people of the ability to own their own home (since they are priced out of the market by landlords, and landlords now own way too much of the housing stock) is a good thing. Right now in NZ about 1/3 of people rent [1]. It’s an all time high across all age groups. I’ve got nothing to back this up, but seems reasonable for people given the choice to own their property vs pay someone else, that they would want to own the property. Yes there are some that want to rent but i seriously doubt it’s anywhere near 1/3rd of the population. I also suspect a significant number of people who prefer to rent would not have this opinion anymore if house prices were not so inflated. Maybe 20-25% but no way the 1/3 of all Kiwis that we are seeing now. Also does 1/6th of all residential property NZ need to be owned by someone with 20+ properties under their belt? [2] Is it good use of public funds to allow such behaviour rather than say encouraging (non residential rental) businesses to grow and expand I’m not calling for elimination of rental properties, just a fair limit on them. In my opinion it’s more important every person is able to buy a single home than every landlord be able to buy as many homes as they want. 1. https://www.stats.govt.nz/assets/Uploads/Reports/Housing-in-Aotearoa-2020/Download-data/housing-in-aotearoa-2020.pdf#page28 https://www.stats.govt.nz/assets/Uploads/Reports/Housing-in-... 2. https://www.newstalkzb.co.nz/news/business/mum-and-dad-landlords-own-more-than-a-third-of-property/ https://www.newstalkzb.co.nz/news/business/mum-and-dad-landl...
- pydry 5y ago
  cant build more land
  - yardstick 5y ago
    The stupid thing is there is a lot of land still, just need to look at the space between Albany and Silverdale, all rural, and yet it’s only Silverdale north that is being developed. Likewise inner city suburbs have a NIMBY problem where it’s taken ages to finally change planning permission / zoning rules to build up. For example some areas on the shore only recently allowed 3-6 story multiple occupant dwellings. We need not just more housing, but denser (quality) housing in the inner areas. Doesn’t have to be all high rises either- look at Paris and their 6 story height limit. Can be done properly.
    - seniorivn 5y ago
      why should there be a building height limit? if there is demand, the market with sane regulation(protection from foreign government interference and hostile manipulation) will provide as much housing as needed with as low prices as possible, driven by investors maximizing their profits from land investments possible solutions for the inaccessible housing issue: - make it so the people profit from housing prices rising -> minimize building and housing regulation, forbid foreign ownership of the land(like at least 50% should be owned by a local) and by taxes and loans make it more likely that a lot of people will own some land then small percentage of the people own a lot of land, specify that all those rules are going to apply for 20 years(number of years calculated to the point when the land of the nation is owned by the nation and more or less even), and it will be a completely free market afterwards(so investors are not afraid to invest) — in a society with high income inequality will require either high taxes for landowners and/or long time to achive high level of land ownership - government built, controlled and owned housing for the people(like singopore), — has a high potential for corruption, any country with weak institutions has a huge risk to end up without housing and with high corruption, income inequality etc
      - yardstick 5y ago
        Agree govt controlled and owned housing is not a good idea in general, private home ownership is the way to go. Exceptions are people on benefits. > and by taxes and loans make it more likely that a lot of people will own some land then small percentage of the people own a lot of land This is what my original comment is all about. Except no 20yr limit, any investor who is banking on capital gains from house price increases will have no problem waiting 20 years to sell. Edit: re height limits, they are important to preserve views and ambience of the local area (London has some rules for instance where St Paul’s cathedral must be visible from certain other major landmarks), avoid too dense housing if it will cause undue issues with infrastructure (insufficient sewage capacity in the area for example), transport on an already congested road etc, and preserve the general vibe of the area (to a degree, people accept gradual change a lot better than a Big Bang approach), also sunlight issues for neighbouring properties. Building a 30 story apartment block in a suburb of 2-3 story houses is just out of place. Building slightly up to 6 stories is not so bad.
- andrewharvey 5y ago
  Supply is increasing, but if that increased supply gets snatched up by investors then you haven't really increased supply for people who need a place to live.
  - IkmoIkmo 5y ago
    These investors want tenants. The more supply, the more (ceteris paribus) rents drop. The more rents drop, the lower the rates of return on the home, meaning the asset is worth less and prices drop for those buying homes, too. Supply leads to lower rents and prices. There's no magic way around these economic laws. Of course if demand grows faster, then prices still go up. But in absence of supply increases it'd be even worse. Supply definitely helps.
    - dukeyukey 5y ago
      > These investors want tenants Not necessarily. By the UK Government's own estimate [1], 1-in-20 homes in West and Central London (the more expensive parts) are empty. The story I've heard is owners who use them as a store of wealth safe from their own government's hands (usually Russia, China, or places in the Middle East). They prefer not to have tenants because it adds risk and complexity. I'm not saying this is the true story, but it's what I've heard, and there are definitely lots of expensive, empty apartments. [1] https://theconversation.com/londons-extraordinary-surplus-of-empty-luxury-apartments-revealed-97947 https://theconversation.com/londons-extraordinary-surplus-of...
      - tharkun__ 5y ago
        I could definitely believe this. Renting something is a hassle and risky. Tenants can easily trash the place requiring expensive repairs. Especially if you don't live close by to have an eye on things. Also I've heard about apartments and commercial rental space staying empty because people can borrow money against the 'value'. If rents drop that value shrinks. If it sits empty, no such problem. You still borrow against that commercial property that rents for $5000 a month. You were just unlucky finding a tenant the past 5 years.
      - 5y ago
imtringued 5y ago
It's always funny how people come up with increasingly convoluted solutions to a simple problem because they don't want the simple solution. I honestly don't see how this is going to solve the problem. You're just making it harder to express the problem but it is still there.
- yardstick 5y ago
  I’ll bite: what’s the simple solution?
  - Nelkins 5y ago
    Make housing abundant by building more of it, like we used to.
    - yardstick 5y ago
      It’ll be snapped up by all the landlords who have had years of profit taking to build up cash reserves to buy additional stock at a premium. That’s what is happening now.
      - dudzik 5y ago
        Let them. This would increase competition and drive down the rent. Making it less lucrative to own property.
mymythisisthis 5y ago
I'm from Ontario, Canada. I find that it's average people getting into the real estate game as a way of protecting their wealth against inflation and not wanting to play the stock market. People blame internation investors, but that is only a small problem. People say we should build more homes, but Ontario already has 10s of thousands of approved homes to build, that have not yet been started. Lack of skilled trades. Developers that are just sitting on the permits as they finish other projects. I think the simple solution is an extra tax on people that own more than 2 homes. An even higher tax if you own more than 3 homes, and so on. Keep increasing the tax rate, on each home a person owns.
- michael1999 5y ago
  Ontario grows by more than 100k people per year. 10s of thousands of homes/year is losing ground, not even treading water.
  - flycaliguy 5y ago
    Yeah, there is a pretty well circulated blog post [1] explaining this population growth. Ontario just wasn’t ready to see this many people show up. If anybody doesn’t make SV money and wants a good tip: Consider an early inheritance of your parent’s home if you can build them an addition. That’s what we are doing. Took out a small mortgage to buy out my sister and we are now raising a family with grandma nice and close. We’ll assist her through old age and the entire thing feels very, I don’t know, European I guess? [1] https://mikepmoffatt.medium.com/ontarians-on-the-move-2021-edition-73709568d58b https://mikepmoffatt.medium.com/ontarians-on-the-move-2021-e...
    - michael1999 5y ago
      I used to blame the FLQ and the 1980 referendum. But Ontario has had 40 years to understand the new reality and Montreal _still_ has more subway than we do. Good advice on co-housing - intergenerational sharing makes a ton of sense for so many reasons.
- kenned3 5y ago

dillondoyle 5y ago

Is there a reason increasing supply wouldn't be an easier solution?

yardstick 5y ago
Yes increasing supply will help, and my suggestions encourage increasing supply over turning existing stock into rentals, but if the new supply is all rentals that doesn’t help owner occupiers much. What needs to happen is owner occupiers are given a competitive edge when bidding for a property over a landlord. Hence more taxes and disincentives for buy to let purchasers. So for example a property selling for $1m, what would happen if it actually cost a landlord say $1.5m after taxes, higher interest etc, but an owner occupier would still just have to pay $1m. That gives an advantage to someone who actually needs the home. Edit: Also new supply takes a long time to ramp up, with planning permission, land acquisition, infrastructure, and there are materials shortages (wood especially) and cost overruns rampant at the moment. There is also a potential issue in the quality of supply (see the leaky building crisis in NZ in the 90s, or how small the apartments of the last decade are).
- IkmoIkmo 5y ago
  > What needs to happen is owner occupiers are given a competitive edge when bidding for a property over a landlord. Hence more taxes and disincentives for buy to let purchasers. A vibrant rental market is a great thing for many reasons (e.g. look up any study on labour mobility). Not sure why we should have tax advantages for home owners and tax disadvantages for the rental market. It's certainly not equitable to the renter class. And there's tons of evidence that home owner tax advantages flow mostly to incumbent home owners who gain the proceeds from any tax advantages spent to help new home owners get into the market.
  - yardstick 5y ago
    Imagine if it was cheaper to buy a house and service the mortgage on it, than to rent. In such a case, is the rental market still a great thing? Yes I agree some rentals are necessary given the practical nature of the housing system. But once they become the cause of people being unable to afford to buy their own home it is an issue that needs addressing.
    - IkmoIkmo 5y ago
      > Imagine if it was cheaper to buy a house and service the mortgage on it, than to rent. In such a case, is the rental market still a great thing? What I'm trying to say is that if the government is manipulating the market by giving tax advantages to the homeowner market, and tax disadvantages to the rental market, that it's not a good way to spend public funds. Home ownership is exactly cheaper because it's so subsidised through various ta breaks. That makes renting more expensive vis-a-vis owning, which hurts the class of people who can't rent or has a different preference around life (e.g. more transient, more mobile, less fixed, travel for work, seasonal work etc). Then concluding 'oh owning is cheaper, but it's less accessible, let's give even more tax breaks and stimulus and make renting even more expensive' only exacerbates the problem, it doesn't solve it.
      - yardstick 5y ago
        I’m not sure how charging taxes on landlords is spending public funds that they would have otherwise had if that tax was not present. There’s no loss of public funds here. I’m also not sure how government policies that deprive people of the ability to own their own home (since they are priced out of the market by landlords, and landlords now own way too much of the housing stock) is a good thing. Right now in NZ about 1/3 of people rent [1]. It’s an all time high across all age groups. I’ve got nothing to back this up, but seems reasonable for people given the choice to own their property vs pay someone else, that they would want to own the property. Yes there are some that want to rent but i seriously doubt it’s anywhere near 1/3rd of the population. I also suspect a significant number of people who prefer to rent would not have this opinion anymore if house prices were not so inflated. Maybe 20-25% but no way the 1/3 of all Kiwis that we are seeing now. Also does 1/6th of all residential property NZ need to be owned by someone with 20+ properties under their belt? [2] Is it good use of public funds to allow such behaviour rather than say encouraging (non residential rental) businesses to grow and expand I’m not calling for elimination of rental properties, just a fair limit on them. In my opinion it’s more important every person is able to buy a single home than every landlord be able to buy as many homes as they want. 1. https://www.stats.govt.nz/assets/Uploads/Reports/Housing-in-Aotearoa-2020/Download-data/housing-in-aotearoa-2020.pdf#page28 https://www.stats.govt.nz/assets/Uploads/Reports/Housing-in-... 2. https://www.newstalkzb.co.nz/news/business/mum-and-dad-landlords-own-more-than-a-third-of-property/ https://www.newstalkzb.co.nz/news/business/mum-and-dad-landl...
pydry 5y ago
cant build more land
- yardstick 5y ago
  The stupid thing is there is a lot of land still, just need to look at the space between Albany and Silverdale, all rural, and yet it’s only Silverdale north that is being developed. Likewise inner city suburbs have a NIMBY problem where it’s taken ages to finally change planning permission / zoning rules to build up. For example some areas on the shore only recently allowed 3-6 story multiple occupant dwellings. We need not just more housing, but denser (quality) housing in the inner areas. Doesn’t have to be all high rises either- look at Paris and their 6 story height limit. Can be done properly.
  - seniorivn 5y ago
    why should there be a building height limit? if there is demand, the market with sane regulation(protection from foreign government interference and hostile manipulation) will provide as much housing as needed with as low prices as possible, driven by investors maximizing their profits from land investments possible solutions for the inaccessible housing issue: - make it so the people profit from housing prices rising -> minimize building and housing regulation, forbid foreign ownership of the land(like at least 50% should be owned by a local) and by taxes and loans make it more likely that a lot of people will own some land then small percentage of the people own a lot of land, specify that all those rules are going to apply for 20 years(number of years calculated to the point when the land of the nation is owned by the nation and more or less even), and it will be a completely free market afterwards(so investors are not afraid to invest) — in a society with high income inequality will require either high taxes for landowners and/or long time to achive high level of land ownership - government built, controlled and owned housing for the people(like singopore), — has a high potential for corruption, any country with weak institutions has a huge risk to end up without housing and with high corruption, income inequality etc
    - yardstick 5y ago
      Agree govt controlled and owned housing is not a good idea in general, private home ownership is the way to go. Exceptions are people on benefits. > and by taxes and loans make it more likely that a lot of people will own some land then small percentage of the people own a lot of land This is what my original comment is all about. Except no 20yr limit, any investor who is banking on capital gains from house price increases will have no problem waiting 20 years to sell. Edit: re height limits, they are important to preserve views and ambience of the local area (London has some rules for instance where St Paul’s cathedral must be visible from certain other major landmarks), avoid too dense housing if it will cause undue issues with infrastructure (insufficient sewage capacity in the area for example), transport on an already congested road etc, and preserve the general vibe of the area (to a degree, people accept gradual change a lot better than a Big Bang approach), also sunlight issues for neighbouring properties. Building a 30 story apartment block in a suburb of 2-3 story houses is just out of place. Building slightly up to 6 stories is not so bad.
andrewharvey 5y ago
Supply is increasing, but if that increased supply gets snatched up by investors then you haven't really increased supply for people who need a place to live.
- IkmoIkmo 5y ago
  These investors want tenants. The more supply, the more (ceteris paribus) rents drop. The more rents drop, the lower the rates of return on the home, meaning the asset is worth less and prices drop for those buying homes, too. Supply leads to lower rents and prices. There's no magic way around these economic laws. Of course if demand grows faster, then prices still go up. But in absence of supply increases it'd be even worse. Supply definitely helps.
  - dukeyukey 5y ago
    > These investors want tenants Not necessarily. By the UK Government's own estimate [1], 1-in-20 homes in West and Central London (the more expensive parts) are empty. The story I've heard is owners who use them as a store of wealth safe from their own government's hands (usually Russia, China, or places in the Middle East). They prefer not to have tenants because it adds risk and complexity. I'm not saying this is the true story, but it's what I've heard, and there are definitely lots of expensive, empty apartments. [1] https://theconversation.com/londons-extraordinary-surplus-of-empty-luxury-apartments-revealed-97947 https://theconversation.com/londons-extraordinary-surplus-of...
    - tharkun__ 5y ago
      I could definitely believe this. Renting something is a hassle and risky. Tenants can easily trash the place requiring expensive repairs. Especially if you don't live close by to have an eye on things. Also I've heard about apartments and commercial rental space staying empty because people can borrow money against the 'value'. If rents drop that value shrinks. If it sits empty, no such problem. You still borrow against that commercial property that rents for $5000 a month. You were just unlucky finding a tenant the past 5 years.
    - 5y ago

imtringued 5y ago

It's always funny how people come up with increasingly convoluted solutions to a simple problem because they don't want the simple solution. I honestly don't see how this is going to solve the problem. You're just making it harder to express the problem but it is still there.

yardstick 5y ago
I’ll bite: what’s the simple solution?
- Nelkins 5y ago
  Make housing abundant by building more of it, like we used to.
  - yardstick 5y ago
    It’ll be snapped up by all the landlords who have had years of profit taking to build up cash reserves to buy additional stock at a premium. That’s what is happening now.
    - dudzik 5y ago
      Let them. This would increase competition and drive down the rent. Making it less lucrative to own property.

mymythisisthis 5y ago

I'm from Ontario, Canada. I find that it's average people getting into the real estate game as a way of protecting their wealth against inflation and not wanting to play the stock market. People blame internation investors, but that is only a small problem. People say we should build more homes, but Ontario already has 10s of thousands of approved homes to build, that have not yet been started. Lack of skilled trades. Developers that are just sitting on the permits as they finish other projects. I think the simple solution is an extra tax on people that own more than 2 homes. An even higher tax if you own more than 3 homes, and so on. Keep increasing the tax rate, on each home a person owns.

michael1999 5y ago
Ontario grows by more than 100k people per year. 10s of thousands of homes/year is losing ground, not even treading water.
- flycaliguy 5y ago
  Yeah, there is a pretty well circulated blog post [1] explaining this population growth. Ontario just wasn’t ready to see this many people show up. If anybody doesn’t make SV money and wants a good tip: Consider an early inheritance of your parent’s home if you can build them an addition. That’s what we are doing. Took out a small mortgage to buy out my sister and we are now raising a family with grandma nice and close. We’ll assist her through old age and the entire thing feels very, I don’t know, European I guess? [1] https://mikepmoffatt.medium.com/ontarians-on-the-move-2021-edition-73709568d58b https://mikepmoffatt.medium.com/ontarians-on-the-move-2021-e...
  - michael1999 5y ago
    I used to blame the FLQ and the 1980 referendum. But Ontario has had 40 years to understand the new reality and Montreal _still_ has more subway than we do. Good advice on co-housing - intergenerational sharing makes a ton of sense for so many reasons.
kenned3 5y ago