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You’re forgetting investors who don’t want to rent property. They just by new properties, keep them empty and pristine and profit of the rising market value of

by mnd999 5y ago

You’re forgetting investors who don’t want to rent property. They just by new properties, keep them empty and pristine and profit of the rising market value of the asset. Sounds crazy but it’s definitely a thing in London. It should attract very high taxes to make it unviable but of course it doesn’t.

theli0nheart 5y ago
This goes right back to supply. Real estate prices don’t exist in a vacuum; ultimately someone will buy said property who wishes to live there and will have decided so due to it being the best of all options.
notanzaiiswear 5y ago
It surely is already very expensive to leave an apartment empty as it is. There also seem to be special circumstances and laws in London. But lets assume the worst, that it is all just pure evil capitalist speculation: even that is not necessarily bad. They try to anticipate future demand. So they anticipate that in the (near) future, somebody will need that apartment even more urgently than the people looking for housing right now. So it is better to keep it available for those people in the future. Think about keeping ICU units ready for future Covid patients for an analogy. So what if the speculators are right, and the future buyers really have a higher need than the current ones? Also I think if there really is just speculation, especially foreign investors, why not build cheap houses and sell them to the speculators for a lot of money? Nobody will ever live there (according to the anti-capitalists), anyway. Seems like a good way to make money for a country.
leppr 5y ago
It's common in my city as well. The reason is tenants can stop paying and are protected by law enforcement from being evicted. That's not even talking about straight up squatters. This makes renting out often non-economically viable, when adjusting for risk.
asdfasgasdgasdg 5y ago
These evil bogeymen are something people believe are very common, but I can't find any solid data on their prevalence in London. People also claim these guys are ruining NYC real estate, but our vacancy rates are below 5%, and most of the places that are vacant are not long term vacant.
- bombcar 5y ago
  It’s much more common in commercial real estate but people confuse the two. Some very select markets may have an actual problem if foreign money laundering is a thing (as I’ve heard is true of Vancouver).
  - asdfasgasdgasdg 5y ago
    Yeah, I have noticed lots of commercial vacancies in NYC. My understanding is that this is because the leases are so long and thus the prices are not as adaptive.
    - bombcar 5y ago
      And commercial loans are VERY dependent on "building income" which is calculated based on lease rates, even if not "leased" in some cases. Lowering rates can cause loan problems.
      - asdfasgasdgasdg 5y ago
        Makes a body wonder why buildings don't just sell their ground floor real estate to get it off the books. There must be some reason, otherwise they would, but it seems like a neat solution to the problem.
- Aunche 5y ago
  Yeah. I was looking to rent a NYC luxury apartment recently and noticed that any reasonable deal gets snatched up very quickly. These apartment complexes do feel empty because the residents tend to be childless, so maybe that's where the confusion would come from. It's sad to see more and more people these days are in denial of basic economics. It's strictly better to rent an apartment out because otherwise you're getting nothing from paying management and taxes.
Ginden 5y ago
Is it actually a thing? When I checked vacancy rates for several cities, all of them were really low.
proxyon 5y ago
This is a conspiracy theory that financially illiterate people love to parrot. There is no benefit to keeping a property vacant on purpose. It incurs opportunity cost, which is the cost of rent. The only reasons a property may remain vacant is either due to regulations, incompetent management or maybe money laundering (an actual crime) in which case collecting rent would impose a burden on the money laundering operation. By no means is this common, it is an extreme exception and bringing it up in these conversations is a goofy platitude by people who know nothing about real estate. It'd be like talking about the supply of automobiles and bringing up "but what about cars destroyed at monster truck rallies or used on movie sets? it's limiting the supply of automobiles!"

by mnd999 5y ago

theli0nheart 5y ago

This goes right back to supply. Real estate prices don’t exist in a vacuum; ultimately someone will buy said property who wishes to live there and will have decided so due to it being the best of all options.

notanzaiiswear 5y ago

It surely is already very expensive to leave an apartment empty as it is. There also seem to be special circumstances and laws in London. But lets assume the worst, that it is all just pure evil capitalist speculation: even that is not necessarily bad. They try to anticipate future demand. So they anticipate that in the (near) future, somebody will need that apartment even more urgently than the people looking for housing right now. So it is better to keep it available for those people in the future. Think about keeping ICU units ready for future Covid patients for an analogy. So what if the speculators are right, and the future buyers really have a higher need than the current ones? Also I think if there really is just speculation, especially foreign investors, why not build cheap houses and sell them to the speculators for a lot of money? Nobody will ever live there (according to the anti-capitalists), anyway. Seems like a good way to make money for a country.

leppr 5y ago

It's common in my city as well. The reason is tenants can stop paying and are protected by law enforcement from being evicted. That's not even talking about straight up squatters. This makes renting out often non-economically viable, when adjusting for risk.

asdfasgasdgasdg 5y ago

These evil bogeymen are something people believe are very common, but I can't find any solid data on their prevalence in London. People also claim these guys are ruining NYC real estate, but our vacancy rates are below 5%, and most of the places that are vacant are not long term vacant.

bombcar 5y ago
It’s much more common in commercial real estate but people confuse the two. Some very select markets may have an actual problem if foreign money laundering is a thing (as I’ve heard is true of Vancouver).
- asdfasgasdgasdg 5y ago
  Yeah, I have noticed lots of commercial vacancies in NYC. My understanding is that this is because the leases are so long and thus the prices are not as adaptive.
  - bombcar 5y ago
    And commercial loans are VERY dependent on "building income" which is calculated based on lease rates, even if not "leased" in some cases. Lowering rates can cause loan problems.
    - asdfasgasdgasdg 5y ago
      Makes a body wonder why buildings don't just sell their ground floor real estate to get it off the books. There must be some reason, otherwise they would, but it seems like a neat solution to the problem.
Aunche 5y ago
Yeah. I was looking to rent a NYC luxury apartment recently and noticed that any reasonable deal gets snatched up very quickly. These apartment complexes do feel empty because the residents tend to be childless, so maybe that's where the confusion would come from. It's sad to see more and more people these days are in denial of basic economics. It's strictly better to rent an apartment out because otherwise you're getting nothing from paying management and taxes.

Ginden 5y ago

Is it actually a thing? When I checked vacancy rates for several cities, all of them were really low.

proxyon 5y ago

This is a conspiracy theory that financially illiterate people love to parrot. There is no benefit to keeping a property vacant on purpose. It incurs opportunity cost, which is the cost of rent. The only reasons a property may remain vacant is either due to regulations, incompetent management or maybe money laundering (an actual crime) in which case collecting rent would impose a burden on the money laundering operation. By no means is this common, it is an extreme exception and bringing it up in these conversations is a goofy platitude by people who know nothing about real estate. It'd be like talking about the supply of automobiles and bringing up "but what about cars destroyed at monster truck rallies or used on movie sets? it's limiting the supply of automobiles!"