13 ms·

The welfare effects of eviction policies

93 points by jseliger 5y ago

gumby 5y ago
Summary: moratoria are popular because they don’t cost anything (actually they shift unfunded mandate onto landlords who respond to the new market risk) or cost a bit when tenant lawyers were supplied. This increases homelessness. Market stabilization against short term shocks (i.e. temporary rent subsidy) functions like unemployment insurance, stabilizing the entire market and not increasing homelessness.
- GaryTang 5y ago
  How is shifting the burden to landlords via moratoria different from shifting the burden to landlords via tax increases? Unless you could forego tax increases by printing more money or by generating more revenues by falling towards the inflection point on the laffer curve.
  - maest 5y ago
    Presumably, it's not just landlords that are shouldering the risk. Also, the US budget is huge and has a lot of buffer room. Worst case you're trading off investing in future development projects with keeping the market stable.
  - harimau777 5y ago
    I could see several possibilities: The effect of a tax increase is more distributed so that it is less likely to be directly passed on to consumers. Increasing taxes shifts the burden more indirectly so it is less likely to be directly passed on to consumers. With rent assistance the landlords continue to receive rent, so it may be easier for them to absorb the costs. Since people receiving rent assistance can keep receiving the assistance if they move to a better deal, competition between landlords is still in place.
  - pjmorris 5y ago
    > How is shifting the burden to landlords via moratoria different from shifting the burden to landlords via tax increases? In the case of a moratorium, the landlord takes an immediate, complete, revenue hit. In the case of tax increases, the landlord pays something extra, spread out over both time and the taxed population. It's like the difference between not getting a paycheck and having your rent go up.
    - fennecfoxen 5y ago
      Making landlords take all the risk individually also means that the market will reward those with increased risk tolerance, i.e. small landlords suffer and exit the market in favor of big landlords.
  - lotsofpulp 5y ago
    I know hotels owners that have restricted anyone from staying at the hotel long enough to qualify as a tenant (usually ~30 nights). So due to these moratoria, everyone now has to depart prior to 30 nights and stay somewhere else because otherwise the hotel will literally be unable to remove a non paying and likely even problematic person from their property for the foreseeable future in some states. I saw a video of one guy threatening hotel staff who the cops would not forcibly remove and the courts are not requiring it because it was not deemed threatening enough. He is still in the room months after the incident, not paying, with the individual hotel owners and staff eating the cost.
  - larsiusprime 5y ago
    Who it's shifted on and how it's passed on depends on the kind of tax. If you impose a tax on buildings, that gets shifted onto tenants. If its a tax on land (ie, the rental value of the location), the landlord has to eat it and it gets fully capitalized into the price, which means the landlord can't pass that on to the tenants and it actually brings the price of the land and rents down. There's a long string of empirical studies that back up this finding, the latest being this one out of Denmark: https://www.zbw.eu/econis-archiv/bitstream/11159/1082/1/arbejdspapir_land_tax.pdf https://www.zbw.eu/econis-archiv/bitstream/11159/1082/1/arbe...
    - jedimastert 5y ago
      > If you impose a tax on buildings, that gets shifted onto tenants. If its a tax on land (ie, the rental value of the location), the landlord has to eat i I'm not quite sure I understand the difference here, but I may be misunderstanding why a tax on the buildings and a tax on the land is different? Are you saying a tax based on rental prices? Otherwise I would assume any cost to the landlord would eventually get passed on to the tenet, being the source of revenue.
      - larsiusprime 5y ago
        This is a good question! So a standard property tax is a tax on the value of the building and the tax on the land. The landlord has to pay the tax whether they're renting it out or not, but what kind of tax you're assessing affects how much they can charge in rent to their tenant. When you tax something, the cost typically gets "passed on" because you are changing the marginal profitability of that thing, and this causes the supply to decrease, which drives up the price. We can make more buildings. But we can't make more land (locations). So theory has long held that a tax on the value of land (also known as a site value tax) cannot be passed on to tenants, because it's not like someone says "well the cost of holding land went up this week Charlie, better make slightly less land this quarter." Though they can and absolutely do in fact do that with regards to, say, housing construction (and gasoline, and cigarettes, and sirloin steaks, and plush dolls, and anything else you might want to tax). And this is exactly the empirical effect that the referenced research paper (and many more like it) find in practice. If you assign a split-rate property tax which taxes two things: land, and improvements (buildings, essentially) at different rates, and you have a natural experiment where you randomly vary the tax rate on the improvements and the tax rate on the land, you will find that the price of the property goes down proportionately to the tax rate on land (full capitalization of land taxes), but that doesn't happen with the portion of the tax rate that falls on buildings. See this for more on the underlying theory: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... If you want more sources on the empirical findings I'm happy to provide that to.
  - somnic 5y ago
    Firstly, it wouldn't necessarily shift as much burden onto landlords, depending on the tax. The burden would be spread around all earners if it were an income tax hike, or all consumers for a sales tax or VAT. The extent to which it does affect landlords, rent subsidies would more than compensate. Secondly, how much landlords pay in tax is less relevant than what incentives the policy sets up. On the part of landlords, eviction moratoria incentivise not renting to higher-risk tenants at all. Higher taxes + rent subsidy would have the opposite effect, with more reason to rent to high risk tenants, and renting out properties that might be marginal otherwise. I don't know all the details of this, obviously, but this sort of policy analysis is much more about how it shifts incentives on the margin, rather than who pays more and who pays less.
  - carom 5y ago
    A tax would be evenly distributed among all property owners. An eviction moratorium or rent stabilization places the burden on random individuals to subsidize poor housing policy (restrictive zoning).
  - cronix 5y ago
    For one thing, the tax burden wouldn't be equal to a months rent, and then multiplied by however many months the moratorium lasts. If you were renting out a house for $1,500 a month, and not able to collect rent for over a year, that's over $18,000 including property taxes. That's quite a tax there, only on landlords. Many of whom not only rely on a small bit of income from them, but are also responsible for paying the mortgage. Likely the bulk of that $1,500 is going to a bank, not a landlords pocket. Not all landlords own the building outright. I doubt most do.
  - gumby 5y ago
    Your question shows the limits from reductio analysis. You have to look at it systemically. Shifting the burden to the landlord, especially at a time of transient shock, is not only a direct tax, it's a tax when they may be themselves suffering a revenue shock just as their tenants are. Even replacing a tenant isn't automatic; there are transient costs and it can take time. While subsidizing the tenants takes cash from a large base (including debt, borrowed at a much lower rate than a landlord can get). That's the surface difference. But you may ask "who cares? Why do the landlords a favor?" Well there's a systemic issue in such a shock (think of swimming in the ocean when a wave drops you then lifts you independent of your swimming). Keeping the tenants in situ means the landlords can continue economic activity (doing repairs, buying lunch, going on vacation, etc). The tenants can too -- if nothing else they can look for a job rather than looking for a job AND looking for a place to live. Or they may not have actually lost their job, but just suffered from transient reduced demand (e.g. fewer haircuts) which might end up being complete job loss if they lose housing. Essentially you are preventing a liquidity crisis. And there are second order consequences as well: as the paper shows homelessness increases; this is a general tax on everyone not just in social programs but in all the followon consequences of having a lot of people on the streets. It's the same argument for subsidising farmers, even if most of them these days are big businesses: they suffer a lot of transient economic pressure (busts and booms) but we need a reliable food supply. So we engage in dreadfully wasteful behavior because we've decided it's better to pay that than suffer a food supply shock.
  - imtringued 5y ago
    Because housing is not liquid. Spread risk over as many people as possible and they will just consider it the cost of doing business. If all the risk is unloaded on a few individuals then every participant will have to account for the potential of a 100% loss no matter how unlikely it is.
  - blitzar 5y ago
    Tax is on profits. Revenue is on the gross. Taking someones profits to zero means they 'break even' on their expenses. Taking someones revenue to zero means they have to pay all their costs out of their own pocket. How is firing someone different from them going up a tax bracket?
  - GuB-42 5y ago
    The tax increase can be for the landlords. Maybe a smart thing is to tax vacant housing and use that money to subsidize unpaid rent. The point is to limit the risk for landlords. Maybe they will earn less on good tenants, because of taxes, but they won't hesitate as much before taking "not as good" tenants.
- klyrs 5y ago
  Sadly, the moratoria were supposed to be buffered with rental assistance programs. But administration was left up to individual states, and many did nothing, or hired apparently incompetent contractors. As of July, only 11% of the allocated rental assistance was disbursed. https://www.usatoday.com/story/news/politics/2021/08/25/89-federal-rental-assistance-unspent-evictions-crisis-looms/5584441001/ https://www.usatoday.com/story/news/politics/2021/08/25/89-f...
hash872 5y ago
When I worked in commercial real estate in a blue state I was introduced to the 'right to counsel' concept, which is just wild. Grifters and professional con artists can successfully not pay rent to small-time family landlords (most rental real estate are tiny, unprofessional operations with 1-2 buildings- lots of recent immigrant owners). And when brought to court, they receive free attorneys from legal aid societies, while the owners have to pay thousands out of pocket. I found the whole concept outrageous. I would never want to be a landlord, the risk-adjusted premia just doesn't make any sense
- kingTug 5y ago
  Seems reasonable in the context of going to court with a mega-corp landlord, though. Which is increasingly common.
  - rootusrootus 5y ago
    Perhaps there ought to be an adjustment to the regulation that differentiates between megacorp landlords and the small landlords who only own a few properties. Maybe some threshold below which both sides qualify for right-to-counsel.
    - deleted 5y ago
      [deleted]
  - seanmcdirmid 5y ago
    > Seems reasonable in the context of going to court with a mega-corp landlord, though. The mega-corp landlords are much more savvy when it comes to dealing with grifters and con artists, to the point that they will usually avoid taking them on as tenants (e.g. via extensive background checks). Small-time landlords are getting savvier, but not at the same speed. > Which is increasingly common. And given the above, they will be probably become the norm in a decade or so.
  - hbn 5y ago
    How convenient that existing laws only "seem reasonable" in a world where mega-corps own all real estate
deleted 5y ago
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Mountain_Skies 5y ago
A slight tangent: I wonder what is going to happen to rents over the coming year now that most of the moratoriums have expired and the evictions are starting to work their way through the court system. Some landlords are going to try to work with delinquent tenants on some sort of payment agreement. Some of these will work out, some won't, which will mean more evictions in the legal pipeline. The people who are evicted aren't going to be able to easily rent another home so there should end up being a glut of rental properties on the market. In theory this should drive down prices as landlords compete for tenants with clean rental records but maybe inflation will end up eating the downward price pressure. Some percentage of those evicted won't be able to find alternate living quarters and end up on the street or living in a vehicle.
- deleted 5y ago
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- Ekaros 5y ago
  On other hand any reasonable landlord should increase rents moving forward to take in account next possible moratorium. I would, it is clear that state is against them so they must set rents to level that can cover such scenario again.
  - blitzar 5y ago
    Pricing model before would have had near 0% probablilty of 12 month moratorium. New model must take it into account, it is simply a question of what probability. Or take out insurance to cover the scenario. Reminds me of Wimbledon. Oddly reported as a "windfall" but no doubt they were called "stupid" for spending $2mil a year on pandemic insurance. It has learnt from the SARS outbreak, taking out pandemic insurance since 2003 https://www.insurancetimes.co.uk/news/wimbledon-set-for-coronavirus-windfall-in-huge-pay-out-from-pandemic-insurance/1433146.article https://www.insurancetimes.co.uk/news/wimbledon-set-for-coro...
  - tsol 5y ago
    Well to be fair the market decides. It's not solely up to landlords, it's up to what the market is willing to pay. Unfortunately even if you did, corporate landlords probably won't because they can afford to. Leaving their prices lower, and a continuation of the cycle of property moving into the hands of corporate landlords like Blackrock. It's a tough issue
thriftwy 5y ago
I am renting out an apartment since the tenant protection law in my country is so permissive it is basically non-existent. I am a laid back landlord who can afford to rent out at slightly under-market rate and not try to squeeze any juice from my tenants. If there would be eviction moratorium, I will think twice before renting out and will only ever consider wealthy tenants and exclude anybody who may have any problems in the future. If there were anything like Paris laws where the tenant may refuse to evict at all, I will just take the property off market. This is basic game theory. The only reason why there's supply is because it comes no strings attached.
- johncessna 5y ago
  I'm also a landlord and in a state that is trying to still push a moratorium and on top of that make it harder to evict once its lifted. You're right. The more strict the laws, the more that goes into tenant screening. Right now the only requirement for me is that you need a security deposit. That'll get adjusted to credit checks, criminal checks, and leases that allow me to void them over basically anything I can get away with per the law. Others, I fear, won't work within the law and start screening on perceptions, stereotypes, and personal history with individuals that get projected onto groups. In short, the quicker it is to evict someone for failure to pay, the less protections a landlord needs to use or worse, invent, to protect their livelihood.
  - throwawaygh 5y ago
    > to protect their livelihood Maybe they should grow up and get a job.
    - woah 5y ago
      Do you believe that only those who can afford to buy a home should have shelter?
      - throwawaygh 5y ago
        Philosophically, I believe the right to shelter is a more important natural right than any other property right. I don't believe it should be legal to extract a profit from ownership of real estate. I don't have any issues with handymen, gardeners, plumbers, construction workers, or even real estate/leasing agents receiving fair compensation for their labor. My issue is only with the idea that landlords should have a right to take profit.
nineplay 5y ago
If it comes up, I'm pretty sure I'd leave my home vacant rather than renting it out. The loss in rent can be accounted for. The cost of a property manager can be accounted for. The costs of tenants who will not pay rent, who will fight eviction, and who will damage the house in a fit of pique upon leaving is immeasurable. This decision isn't made though vague horror stories, there are people I know who've had tenants do thousands of dollars worth of damage before they're forcibly evicted. It's not worth the risk.
- eikenberry 5y ago
  > If it comes up, I'm pretty sure I'd leave my home vacant rather than renting it out. I'm not sure if it's everywhere, but in some states you legally cannot do this if you still owe a mortgage. The mortgage requires home owners insurance, and the insurance companies won't sell you home owners insurance on an empty house. We were forced to rent our house when we needed to move (during the slump, so no buyers) due to this.
  - mdavis6890 5y ago
    Not the case. In the US you can normally get investment (rental property) insurance with a vacancy rider that jacks up your rate a bit. I've had to do this once or twice during extended periods between tenants. There may be time limits on it though, which I don't recall.
- wintermutestwin 5y ago
  >The loss in rent can be accounted for. This is only true if being a landlord is your "day job."
  - ThunderSizzle 5y ago
    He's pointing out the risk of no rent is a calculated risk. The risk of a tenant trashing your property is the entire value of the home.
gigel82 5y ago
Do we have numbers on how many tenants are making use of eviction moratoria? I know a few folks that are apprehensive of the markets just cashed out, took a mortgage and bought a condo to rent. Especially if they bought a couple of condos I can't imagine they'd otherwise have the income or reserve to pay out-of-pocket when their tenants refuse to. I'm as liberal as they get but this kind of thing feels like over-stepping from the government; I agree tenants need to be helped, but not by moving the hardship upstream in the economy - maybe the government should pay their rent instead. Dunno, feels very strange.
- UglyToad 5y ago
  Just to voice an opinion opposite what seems to be the prevailing one in this thread. So what. They bought a spare house and wanted to farm people for what they felt was a safe 8% while doing minimal work themselves. The situation changed. Life sucks doesn't it. We don't bail market investors out in a market crash and at least they're (outside of REITs, and you can guess my views on those) not speculating on the essentials of literally living. Why should we offer landlords a bung off the back of hard-working taxpayers who are, a large minority, already handing over vast amounts of their take-home to landlords anyway. Worst comes to the worst they foreclose on their spare home and the bank who took a stupid risk lending eat the loss from the tenant. Every annual company statement contains a risks section which usually includes the unforeseens such as changes to legislation. That's what's happened here, why should rent seekers get kid gloves?
  - troupe 5y ago
    The market changing is different than the government commandeering your property and requiring you to let non-paying tenants live in it.
  - gigel82 5y ago
    That's not an accurate comparison. Risk is risk of course, the rental market could crash but what I find weird is the government stepping in like this. Imagine you wanted to sell your Facebook stock once it starts crashing (to buy another stock that maybe performs better) but the government says no you can't because Facebook employees will be affected so not only are you obligated to hold the stock, but you'll also need to pay out of pocket to keep it. Just to be clear, I have no sympathy for the slumlords and rental corporations, I'm talking about regular folks that chose the rental market as more risk-adverse investors and maybe put all their savings into a single property that they fixed up and are maintaining themselves.

93 points by jseliger 5y ago

Summary: moratoria are popular because they don’t cost anything (actually they shift unfunded mandate onto landlords who respond to the new market risk) or cost a bit when tenant lawyers were supplied. This increases homelessness. Market stabilization against short term shocks (i.e. temporary rent subsidy) functions like unemployment insurance, stabilizing the entire market and not increasing homelessness.

GaryTang 5y ago
How is shifting the burden to landlords via moratoria different from shifting the burden to landlords via tax increases? Unless you could forego tax increases by printing more money or by generating more revenues by falling towards the inflection point on the laffer curve.
- maest 5y ago
  Presumably, it's not just landlords that are shouldering the risk. Also, the US budget is huge and has a lot of buffer room. Worst case you're trading off investing in future development projects with keeping the market stable.
- harimau777 5y ago
  I could see several possibilities: The effect of a tax increase is more distributed so that it is less likely to be directly passed on to consumers. Increasing taxes shifts the burden more indirectly so it is less likely to be directly passed on to consumers. With rent assistance the landlords continue to receive rent, so it may be easier for them to absorb the costs. Since people receiving rent assistance can keep receiving the assistance if they move to a better deal, competition between landlords is still in place.
- pjmorris 5y ago
  > How is shifting the burden to landlords via moratoria different from shifting the burden to landlords via tax increases? In the case of a moratorium, the landlord takes an immediate, complete, revenue hit. In the case of tax increases, the landlord pays something extra, spread out over both time and the taxed population. It's like the difference between not getting a paycheck and having your rent go up.
  - fennecfoxen 5y ago
    Making landlords take all the risk individually also means that the market will reward those with increased risk tolerance, i.e. small landlords suffer and exit the market in favor of big landlords.
- lotsofpulp 5y ago
  I know hotels owners that have restricted anyone from staying at the hotel long enough to qualify as a tenant (usually ~30 nights). So due to these moratoria, everyone now has to depart prior to 30 nights and stay somewhere else because otherwise the hotel will literally be unable to remove a non paying and likely even problematic person from their property for the foreseeable future in some states. I saw a video of one guy threatening hotel staff who the cops would not forcibly remove and the courts are not requiring it because it was not deemed threatening enough. He is still in the room months after the incident, not paying, with the individual hotel owners and staff eating the cost.
- larsiusprime 5y ago
  Who it's shifted on and how it's passed on depends on the kind of tax. If you impose a tax on buildings, that gets shifted onto tenants. If its a tax on land (ie, the rental value of the location), the landlord has to eat it and it gets fully capitalized into the price, which means the landlord can't pass that on to the tenants and it actually brings the price of the land and rents down. There's a long string of empirical studies that back up this finding, the latest being this one out of Denmark: https://www.zbw.eu/econis-archiv/bitstream/11159/1082/1/arbejdspapir_land_tax.pdf https://www.zbw.eu/econis-archiv/bitstream/11159/1082/1/arbe...
  - jedimastert 5y ago
    > If you impose a tax on buildings, that gets shifted onto tenants. If its a tax on land (ie, the rental value of the location), the landlord has to eat i I'm not quite sure I understand the difference here, but I may be misunderstanding why a tax on the buildings and a tax on the land is different? Are you saying a tax based on rental prices? Otherwise I would assume any cost to the landlord would eventually get passed on to the tenet, being the source of revenue.
    - larsiusprime 5y ago
      This is a good question! So a standard property tax is a tax on the value of the building and the tax on the land. The landlord has to pay the tax whether they're renting it out or not, but what kind of tax you're assessing affects how much they can charge in rent to their tenant. When you tax something, the cost typically gets "passed on" because you are changing the marginal profitability of that thing, and this causes the supply to decrease, which drives up the price. We can make more buildings. But we can't make more land (locations). So theory has long held that a tax on the value of land (also known as a site value tax) cannot be passed on to tenants, because it's not like someone says "well the cost of holding land went up this week Charlie, better make slightly less land this quarter." Though they can and absolutely do in fact do that with regards to, say, housing construction (and gasoline, and cigarettes, and sirloin steaks, and plush dolls, and anything else you might want to tax). And this is exactly the empirical effect that the referenced research paper (and many more like it) find in practice. If you assign a split-rate property tax which taxes two things: land, and improvements (buildings, essentially) at different rates, and you have a natural experiment where you randomly vary the tax rate on the improvements and the tax rate on the land, you will find that the price of the property goes down proportionately to the tax rate on land (full capitalization of land taxes), but that doesn't happen with the portion of the tax rate that falls on buildings. See this for more on the underlying theory: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... If you want more sources on the empirical findings I'm happy to provide that to.
- somnic 5y ago
  Firstly, it wouldn't necessarily shift as much burden onto landlords, depending on the tax. The burden would be spread around all earners if it were an income tax hike, or all consumers for a sales tax or VAT. The extent to which it does affect landlords, rent subsidies would more than compensate. Secondly, how much landlords pay in tax is less relevant than what incentives the policy sets up. On the part of landlords, eviction moratoria incentivise not renting to higher-risk tenants at all. Higher taxes + rent subsidy would have the opposite effect, with more reason to rent to high risk tenants, and renting out properties that might be marginal otherwise. I don't know all the details of this, obviously, but this sort of policy analysis is much more about how it shifts incentives on the margin, rather than who pays more and who pays less.
- carom 5y ago
  A tax would be evenly distributed among all property owners. An eviction moratorium or rent stabilization places the burden on random individuals to subsidize poor housing policy (restrictive zoning).
- cronix 5y ago
  For one thing, the tax burden wouldn't be equal to a months rent, and then multiplied by however many months the moratorium lasts. If you were renting out a house for $1,500 a month, and not able to collect rent for over a year, that's over $18,000 including property taxes. That's quite a tax there, only on landlords. Many of whom not only rely on a small bit of income from them, but are also responsible for paying the mortgage. Likely the bulk of that $1,500 is going to a bank, not a landlords pocket. Not all landlords own the building outright. I doubt most do.
- gumby 5y ago
  Your question shows the limits from reductio analysis. You have to look at it systemically. Shifting the burden to the landlord, especially at a time of transient shock, is not only a direct tax, it's a tax when they may be themselves suffering a revenue shock just as their tenants are. Even replacing a tenant isn't automatic; there are transient costs and it can take time. While subsidizing the tenants takes cash from a large base (including debt, borrowed at a much lower rate than a landlord can get). That's the surface difference. But you may ask "who cares? Why do the landlords a favor?" Well there's a systemic issue in such a shock (think of swimming in the ocean when a wave drops you then lifts you independent of your swimming). Keeping the tenants in situ means the landlords can continue economic activity (doing repairs, buying lunch, going on vacation, etc). The tenants can too -- if nothing else they can look for a job rather than looking for a job AND looking for a place to live. Or they may not have actually lost their job, but just suffered from transient reduced demand (e.g. fewer haircuts) which might end up being complete job loss if they lose housing. Essentially you are preventing a liquidity crisis. And there are second order consequences as well: as the paper shows homelessness increases; this is a general tax on everyone not just in social programs but in all the followon consequences of having a lot of people on the streets. It's the same argument for subsidising farmers, even if most of them these days are big businesses: they suffer a lot of transient economic pressure (busts and booms) but we need a reliable food supply. So we engage in dreadfully wasteful behavior because we've decided it's better to pay that than suffer a food supply shock.
- imtringued 5y ago
  Because housing is not liquid. Spread risk over as many people as possible and they will just consider it the cost of doing business. If all the risk is unloaded on a few individuals then every participant will have to account for the potential of a 100% loss no matter how unlikely it is.
- blitzar 5y ago
  Tax is on profits. Revenue is on the gross. Taking someones profits to zero means they 'break even' on their expenses. Taking someones revenue to zero means they have to pay all their costs out of their own pocket. How is firing someone different from them going up a tax bracket?
- GuB-42 5y ago
  The tax increase can be for the landlords. Maybe a smart thing is to tax vacant housing and use that money to subsidize unpaid rent. The point is to limit the risk for landlords. Maybe they will earn less on good tenants, because of taxes, but they won't hesitate as much before taking "not as good" tenants.
klyrs 5y ago
Sadly, the moratoria were supposed to be buffered with rental assistance programs. But administration was left up to individual states, and many did nothing, or hired apparently incompetent contractors. As of July, only 11% of the allocated rental assistance was disbursed. https://www.usatoday.com/story/news/politics/2021/08/25/89-federal-rental-assistance-unspent-evictions-crisis-looms/5584441001/ https://www.usatoday.com/story/news/politics/2021/08/25/89-f...

hash872 5y ago

When I worked in commercial real estate in a blue state I was introduced to the 'right to counsel' concept, which is just wild. Grifters and professional con artists can successfully not pay rent to small-time family landlords (most rental real estate are tiny, unprofessional operations with 1-2 buildings- lots of recent immigrant owners). And when brought to court, they receive free attorneys from legal aid societies, while the owners have to pay thousands out of pocket. I found the whole concept outrageous. I would never want to be a landlord, the risk-adjusted premia just doesn't make any sense

kingTug 5y ago
Seems reasonable in the context of going to court with a mega-corp landlord, though. Which is increasingly common.
- rootusrootus 5y ago
  Perhaps there ought to be an adjustment to the regulation that differentiates between megacorp landlords and the small landlords who only own a few properties. Maybe some threshold below which both sides qualify for right-to-counsel.
  - deleted 5y ago
    [deleted]
- seanmcdirmid 5y ago
  > Seems reasonable in the context of going to court with a mega-corp landlord, though. The mega-corp landlords are much more savvy when it comes to dealing with grifters and con artists, to the point that they will usually avoid taking them on as tenants (e.g. via extensive background checks). Small-time landlords are getting savvier, but not at the same speed. > Which is increasingly common. And given the above, they will be probably become the norm in a decade or so.
- hbn 5y ago
  How convenient that existing laws only "seem reasonable" in a world where mega-corps own all real estate

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Mountain_Skies 5y ago

A slight tangent: I wonder what is going to happen to rents over the coming year now that most of the moratoriums have expired and the evictions are starting to work their way through the court system. Some landlords are going to try to work with delinquent tenants on some sort of payment agreement. Some of these will work out, some won't, which will mean more evictions in the legal pipeline. The people who are evicted aren't going to be able to easily rent another home so there should end up being a glut of rental properties on the market. In theory this should drive down prices as landlords compete for tenants with clean rental records but maybe inflation will end up eating the downward price pressure. Some percentage of those evicted won't be able to find alternate living quarters and end up on the street or living in a vehicle.

deleted 5y ago
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Ekaros 5y ago
On other hand any reasonable landlord should increase rents moving forward to take in account next possible moratorium. I would, it is clear that state is against them so they must set rents to level that can cover such scenario again.
- blitzar 5y ago
  Pricing model before would have had near 0% probablilty of 12 month moratorium. New model must take it into account, it is simply a question of what probability. Or take out insurance to cover the scenario. Reminds me of Wimbledon. Oddly reported as a "windfall" but no doubt they were called "stupid" for spending $2mil a year on pandemic insurance. It has learnt from the SARS outbreak, taking out pandemic insurance since 2003 https://www.insurancetimes.co.uk/news/wimbledon-set-for-coronavirus-windfall-in-huge-pay-out-from-pandemic-insurance/1433146.article https://www.insurancetimes.co.uk/news/wimbledon-set-for-coro...
- tsol 5y ago
  Well to be fair the market decides. It's not solely up to landlords, it's up to what the market is willing to pay. Unfortunately even if you did, corporate landlords probably won't because they can afford to. Leaving their prices lower, and a continuation of the cycle of property moving into the hands of corporate landlords like Blackrock. It's a tough issue

thriftwy 5y ago

I am renting out an apartment since the tenant protection law in my country is so permissive it is basically non-existent. I am a laid back landlord who can afford to rent out at slightly under-market rate and not try to squeeze any juice from my tenants. If there would be eviction moratorium, I will think twice before renting out and will only ever consider wealthy tenants and exclude anybody who may have any problems in the future. If there were anything like Paris laws where the tenant may refuse to evict at all, I will just take the property off market. This is basic game theory. The only reason why there's supply is because it comes no strings attached.

johncessna 5y ago
I'm also a landlord and in a state that is trying to still push a moratorium and on top of that make it harder to evict once its lifted. You're right. The more strict the laws, the more that goes into tenant screening. Right now the only requirement for me is that you need a security deposit. That'll get adjusted to credit checks, criminal checks, and leases that allow me to void them over basically anything I can get away with per the law. Others, I fear, won't work within the law and start screening on perceptions, stereotypes, and personal history with individuals that get projected onto groups. In short, the quicker it is to evict someone for failure to pay, the less protections a landlord needs to use or worse, invent, to protect their livelihood.
- throwawaygh 5y ago
  > to protect their livelihood Maybe they should grow up and get a job.
  - woah 5y ago
    Do you believe that only those who can afford to buy a home should have shelter?
    - throwawaygh 5y ago
      Philosophically, I believe the right to shelter is a more important natural right than any other property right. I don't believe it should be legal to extract a profit from ownership of real estate. I don't have any issues with handymen, gardeners, plumbers, construction workers, or even real estate/leasing agents receiving fair compensation for their labor. My issue is only with the idea that landlords should have a right to take profit.

nineplay 5y ago

If it comes up, I'm pretty sure I'd leave my home vacant rather than renting it out. The loss in rent can be accounted for. The cost of a property manager can be accounted for. The costs of tenants who will not pay rent, who will fight eviction, and who will damage the house in a fit of pique upon leaving is immeasurable. This decision isn't made though vague horror stories, there are people I know who've had tenants do thousands of dollars worth of damage before they're forcibly evicted. It's not worth the risk.

eikenberry 5y ago
> If it comes up, I'm pretty sure I'd leave my home vacant rather than renting it out. I'm not sure if it's everywhere, but in some states you legally cannot do this if you still owe a mortgage. The mortgage requires home owners insurance, and the insurance companies won't sell you home owners insurance on an empty house. We were forced to rent our house when we needed to move (during the slump, so no buyers) due to this.
- mdavis6890 5y ago
  Not the case. In the US you can normally get investment (rental property) insurance with a vacancy rider that jacks up your rate a bit. I've had to do this once or twice during extended periods between tenants. There may be time limits on it though, which I don't recall.
wintermutestwin 5y ago
>The loss in rent can be accounted for. This is only true if being a landlord is your "day job."
- ThunderSizzle 5y ago
  He's pointing out the risk of no rent is a calculated risk. The risk of a tenant trashing your property is the entire value of the home.

gigel82 5y ago

Do we have numbers on how many tenants are making use of eviction moratoria? I know a few folks that are apprehensive of the markets just cashed out, took a mortgage and bought a condo to rent. Especially if they bought a couple of condos I can't imagine they'd otherwise have the income or reserve to pay out-of-pocket when their tenants refuse to. I'm as liberal as they get but this kind of thing feels like over-stepping from the government; I agree tenants need to be helped, but not by moving the hardship upstream in the economy - maybe the government should pay their rent instead. Dunno, feels very strange.

UglyToad 5y ago
Just to voice an opinion opposite what seems to be the prevailing one in this thread. So what. They bought a spare house and wanted to farm people for what they felt was a safe 8% while doing minimal work themselves. The situation changed. Life sucks doesn't it. We don't bail market investors out in a market crash and at least they're (outside of REITs, and you can guess my views on those) not speculating on the essentials of literally living. Why should we offer landlords a bung off the back of hard-working taxpayers who are, a large minority, already handing over vast amounts of their take-home to landlords anyway. Worst comes to the worst they foreclose on their spare home and the bank who took a stupid risk lending eat the loss from the tenant. Every annual company statement contains a risks section which usually includes the unforeseens such as changes to legislation. That's what's happened here, why should rent seekers get kid gloves?
- troupe 5y ago
  The market changing is different than the government commandeering your property and requiring you to let non-paying tenants live in it.
- gigel82 5y ago
  That's not an accurate comparison. Risk is risk of course, the rental market could crash but what I find weird is the government stepping in like this. Imagine you wanted to sell your Facebook stock once it starts crashing (to buy another stock that maybe performs better) but the government says no you can't because Facebook employees will be affected so not only are you obligated to hold the stock, but you'll also need to pay out of pocket to keep it. Just to be clear, I have no sympathy for the slumlords and rental corporations, I'm talking about regular folks that chose the rental market as more risk-adverse investors and maybe put all their savings into a single property that they fixed up and are maintaining themselves.