5 ms·

Economy and distribution of land rents in Singapore (1996)

39 points by ZeljkoS 5y ago

imtringued 5y ago
Instead of demanding rent control or rent subsidies it would be more effective to demand a land reform and a land value tax. Georgism is one of those things that has had a long history of success. However, just like the end of Feudalism it is one of those things that can only be acquired by spilling blood as it is extremely unlikely to make the transition during peaceful times. The "weak men cause problems which leads to strong men who solve them" meme is a good illustration of this problem. During peace there is no urgency, people aren't willing to step over certain hard lines that would be beneficial for everyone but are considered a social taboo over the short term. Some maliciously hedonistic individuals think they can sacrifice some benefits to society for personal gain by staying within the hard lines and abusing "oversights" or "loopholes" that the law set. Until people are starting to burst out in anger and start a "revolution" that would be completely unnecessary if people in power just agreed to adopt the peaceful solution immediately. It's not like Georgism is going to eat the rich, instead it upgrades the capitalists into a more respectable "class" as they can no longer be blamed for this type of exploitation. Let socialists and marxists become an extinct species as they have less and less to complain about. The loophole is the fact that we as a society have decided that we don't have to share our land with new arrivals (migrants and newborns) and that the cost of public infrastructure should not be passed onto the beneficiaries of that infrastructure.
- Schopenhauer01 5y ago
  Land value tax = Higher rent, no?
  - pydry 5y ago
    No change short term, long term lower rent. LVT pressures land owners to use land more productively = more rental units available = lower rents. It means lower property prices though, and it would push a lot of mortgaged property underwater.
  - eushebdbsh 5y ago
    if tax is same for single family as high density tax will be spread out over lots of people in high density
  - thematrixturtle 5y ago
    Not in the long term if it leads to unproductive property being put to better uses, like building housing. Land value taxes aren't a silver bullet that can solve problems like California's permitting process, but it would certainly align incentives in a much healthier direction than Prop 13 does.
    - Schopenhauer01 5y ago
      Now minimum rent becomes the value of land rent, I still think increasing taxes hurt the people paying rent.
    - Rastonbury 5y ago
      Just to add, Singapore is quite unique in that it has like 85% homeownership (most of it government housing) and there are virtually no homeless people
      - unmole 5y ago
        It's closer to 78% and that is still potentially misleading .Young people living with their parents because they can't get a HBD flat are also included in that 78% figure.
- usrn 5y ago
refurb 5y ago
I think the West could certainly resolve their housing problem using Singapore's approach: - government owns the land - government sells 99-year leases to private developers - government uses profits from land sales to subsidize "purchase" of said housing - once the 99-years is up, the land goes back to the government, residents find somewhere else to live, the land is cleared and resold under a new 99-year lease - rinse and repeat
- valarauko 5y ago
  In theory, sure - but even Singapore hasn't been around long enough to witness what happens when the 99 year lease is finally up. In a market of housing shortage, there would be strong pressure on the government to keep extending the lease to keep the limited housing stock around, at least in an American context.
  - nopzor 5y ago
    the way this happens in singapore is pretty well defined - properties can “top up” their 99 year lease, if the developers/owners want to. - at the end of the 99 year lease, the owners can sell to a third party developer if there is demand (they’d still have to move). this has happened before many times too. this is called an en bloc sale in singapore. also, keep in mind singapore also has 999 year leases and “freehold” (effectively the “forever” style of property ownership common in the usa). freehold properties are both rarer and more expensive. something like 80% of the land in singapore is on a 99 year lease. personally i think it is a fantastic system.
    - valarauko 5y ago
      My concern is that while in theory this process seems fine, I wonder how it'll work in practice when long term leases actually end. For what it's worth, this is pretty much how public housing in India works as well, but we have yet to find out what happens when the leases actually come due. In India we can largely avoid the problem by throwing more and more "undeveloped" land towards housing. If anything, the government has a rather encouraging attitude to convert leasehold properties to freehold, at least for private residences built under the leasehold schemes. > this has happened before many times too. I assume this is developers selling before the 99 year lease is up, since the legal entity of Singapore and this leasing arrangement haven't been around long enough to see what happens when the lease is up. If presumably 80% of the housing stock in SG is held in such an arrangement, what happens if a major chunk of leases come due in close succession of each other, eg, 10%? 10% of the population would be expected to move to housing stock which doesn't exist yet.

39 points by ZeljkoS 5y ago

Instead of demanding rent control or rent subsidies it would be more effective to demand a land reform and a land value tax. Georgism is one of those things that has had a long history of success. However, just like the end of Feudalism it is one of those things that can only be acquired by spilling blood as it is extremely unlikely to make the transition during peaceful times. The "weak men cause problems which leads to strong men who solve them" meme is a good illustration of this problem. During peace there is no urgency, people aren't willing to step over certain hard lines that would be beneficial for everyone but are considered a social taboo over the short term. Some maliciously hedonistic individuals think they can sacrifice some benefits to society for personal gain by staying within the hard lines and abusing "oversights" or "loopholes" that the law set. Until people are starting to burst out in anger and start a "revolution" that would be completely unnecessary if people in power just agreed to adopt the peaceful solution immediately. It's not like Georgism is going to eat the rich, instead it upgrades the capitalists into a more respectable "class" as they can no longer be blamed for this type of exploitation. Let socialists and marxists become an extinct species as they have less and less to complain about. The loophole is the fact that we as a society have decided that we don't have to share our land with new arrivals (migrants and newborns) and that the cost of public infrastructure should not be passed onto the beneficiaries of that infrastructure.

Schopenhauer01 5y ago
Land value tax = Higher rent, no?
- pydry 5y ago
  No change short term, long term lower rent. LVT pressures land owners to use land more productively = more rental units available = lower rents. It means lower property prices though, and it would push a lot of mortgaged property underwater.
- eushebdbsh 5y ago
  if tax is same for single family as high density tax will be spread out over lots of people in high density
- thematrixturtle 5y ago
  Not in the long term if it leads to unproductive property being put to better uses, like building housing. Land value taxes aren't a silver bullet that can solve problems like California's permitting process, but it would certainly align incentives in a much healthier direction than Prop 13 does.
  - Schopenhauer01 5y ago
    Now minimum rent becomes the value of land rent, I still think increasing taxes hurt the people paying rent.
  - Rastonbury 5y ago
    Just to add, Singapore is quite unique in that it has like 85% homeownership (most of it government housing) and there are virtually no homeless people
    - unmole 5y ago
      It's closer to 78% and that is still potentially misleading .Young people living with their parents because they can't get a HBD flat are also included in that 78% figure.
usrn 5y ago

refurb 5y ago

I think the West could certainly resolve their housing problem using Singapore's approach: - government owns the land - government sells 99-year leases to private developers - government uses profits from land sales to subsidize "purchase" of said housing - once the 99-years is up, the land goes back to the government, residents find somewhere else to live, the land is cleared and resold under a new 99-year lease - rinse and repeat

valarauko 5y ago
In theory, sure - but even Singapore hasn't been around long enough to witness what happens when the 99 year lease is finally up. In a market of housing shortage, there would be strong pressure on the government to keep extending the lease to keep the limited housing stock around, at least in an American context.
- nopzor 5y ago
  the way this happens in singapore is pretty well defined - properties can “top up” their 99 year lease, if the developers/owners want to. - at the end of the 99 year lease, the owners can sell to a third party developer if there is demand (they’d still have to move). this has happened before many times too. this is called an en bloc sale in singapore. also, keep in mind singapore also has 999 year leases and “freehold” (effectively the “forever” style of property ownership common in the usa). freehold properties are both rarer and more expensive. something like 80% of the land in singapore is on a 99 year lease. personally i think it is a fantastic system.
  - valarauko 5y ago
    My concern is that while in theory this process seems fine, I wonder how it'll work in practice when long term leases actually end. For what it's worth, this is pretty much how public housing in India works as well, but we have yet to find out what happens when the leases actually come due. In India we can largely avoid the problem by throwing more and more "undeveloped" land towards housing. If anything, the government has a rather encouraging attitude to convert leasehold properties to freehold, at least for private residences built under the leasehold schemes. > this has happened before many times too. I assume this is developers selling before the 99 year lease is up, since the legal entity of Singapore and this leasing arrangement haven't been around long enough to see what happens when the lease is up. If presumably 80% of the housing stock in SG is held in such an arrangement, what happens if a major chunk of leases come due in close succession of each other, eg, 10%? 10% of the population would be expected to move to housing stock which doesn't exist yet.