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I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you sh

I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that would de-incentivize investment which would reduce the future housing supply". But I call b.s. on that. Residents would be able to afford new construction and maintenance if those things had lower price pressure. It should raise the bar on an investor attempting to profit by owning property. They should need to do a substantially better job at maintaining and increasing the value of real estate to justify owning it instead of a resident.

capitalsigma 4y ago
Even if the vacancy rate is 10%, that hardly seems likely to cause a "crash."
MontyCarloHall 4y ago
>but everyone who owns property would be against it because they don't want to see their net-worth drop. They would be against it because it would mean they can never move, since they are now underwater on their mortgages. Most people who only own one property don’t care about its impact on their net worth unless they are planning on downsizing, since they can’t just liquidate the house to purchase other things as they can with other assets.
- oblio 4y ago
  It depends on where they want to move. For national policies prices should drop nation wide, ergo people would still be able to move inside the same country (probably 99% of relocations). And if they don't sell, they wouldn't care much. Yeah, annoying, but as long as you pay the installments, not much changes in practice.
  - MontyCarloHall 4y ago
    >For national policies prices should drop nation wide, ergo people would still be able to move inside the same country No. Suppose I buy a million dollar house at 20% down. I thus owe $800k in principal to the bank. I live in the house for a few years, and build up $100k in additional equity beyond my down payment. If housing prices stayed the same, I could sell the house for $1M, use $700k of that to pay off my remaining principal, and use the remaining $300k towards my next $1M house. (If housing prices appreciated by 20%, I have $300k in equity and $200k in profit to put towards another $1.2M house.) Now suppose the housing market crashes by 50% and my house is worth $500k. If I sell my house for $500k, I still owe $200k of principal to the bank. I don’t have any leftover money to go towards another $500k house, or even a $0 house; instead, I have $200k in debt that buys me absolutely nothing.
    - ethbr0 4y ago
      The key component in this scenario is that the owner (debtor) is taking 100% of the value decrease, while the mortgage lender is taking a 0% decrease. In the event we implemented a market-wide adjustment, presumably we'd suspend business-as-usual to more evenly allocate that through the transition.
    - sbrother 4y ago
      Are there any financial products to help with this situation; ie allowing you to take out an $800k loan on the new house? Presumably this wouldn’t be any riskier for the bank than simply continuing to own the old underwater loan. Possibly less risky since the homeowner, living where they wanted to live, would have less incentive to simply walk away.
      - bombcar 4y ago
        The whole situation is confused; banks often have quite the ability to "go after you" for deficiency but in actuality they rarely do. And in some states, such as California, on the original purchase loan they cannot; it's non-recourse. But they sold your loan long ago, and trying to "do the math" and resell a new underwater one doesn't work.
nrmitchi 4y ago
The biggest thing missed when proposals like that is that not everyone wants to (or does it make sense to) buy a property. Making it 4x more expensive to own a rental property means that rent will be 4x more expensive for those that have to rent. If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.
- ItsMonkk 4y ago
  Not true, but I'm a Georgist so would be against the GP's targeting non-owner tax. Tax everyone according to the value of the unimproved value of their land. I can show you plenty of places with $3k+ rents in SF with prop 13 property taxes that have not changed their tax meaningfully in decades. Taxes have absolutely no effect on what the renter pays. The tenant is always paying the land value. It's just going straight to the landlord if you don't have a land value tax, and it goes to society if you do. If you are going to buy a valuable property, why do you need to pay twice[0]? If you adjust the land tax such that it equals the accruing land value, the price of land becomes zero. The local government can then use that tax money to do all sorts of things[1]. They can also use that as a way to reduce other taxes. Get rid of sales and income taxes. The Henry George Theorem states that a land tax should be able to solely fund governmental services. After all, all taxes come out of rents, so if you tax income, then that disincentives work, so you get less work. If you tax buildings, you get less buildings. If you tax land, there's always a set amount, so there is no harmful effects. [0]: https://www.youtube.com/watch?v=kxvXzM1mBWo https://www.youtube.com/watch?v=kxvXzM1mBWo [1]: https://www.youtube.com/watch?v=KVMGzkSgGXI https://www.youtube.com/watch?v=KVMGzkSgGXI
  - nrmitchi 4y ago
    "Taxes have no effect on what the renter pays"; by this I assume you mean "market rate is market rate regardless of cost". Sure, to a point. The tax situation of my individual property does not impact the market rate. Just like how the market rate does not change if there is a mortgage on a property, or paid-in-full. If the entire market is faced by a new tax all at once, you will see rents rise. Costs across the board went up, and every property owner isn't going to operate at a loss. > Tax everyone according to the value of the unimproved value of their land. Sure. This is the exact opposite of what the parent post was suggesting, where they suggested taxing people different based on the use of the same land improvements.
bushbaba 4y ago
Remove depreciation, 1031b, and government backed loans for non owner occupied properties. That would do the most damage.
- nrmitchi 4y ago
  You don't even have to removal all of them; just make it so you can't use all of them. You're depreciating your asset? You don't get to depreciate, and deduct repair/maintenance costs. You're depreciating? You don't get to 1031 the asset as well (and avoid recapture). Regarding government back loans, I think you're right, ish. It's very weird that it's a thing at all, and that you can use subsidized loans for up to 4 unit properties. BUT I do believe this availability has been an on-ramp to a career in real estate, and a wealth building mechanism, for many, many previously-disadvantaged people. It's definitely been bastardized into something else over the last decade. That aside though, individuals are limited to a maximum of 10 government-backed morgages, and it becomes much more difficult to qualify for new ones after 4. While yes, that sounds like a lot, large real estate companies that are managing 10s of thousands of units are not utilizing these programs, and eliminating them would serve only to limit the "mom and pop landlords" that, frankly, tend to offer a lot more flexibility for tenants than large management companies do.
badpun 4y ago
Wouldn't that mostly just increase the rents? I.e. the landlords can offload the extra tax to their clients (renters).
- elevatortrim 4y ago
  That would be true if rent was a percentage on top of cost. But it is not, it is whatever maximum renters are willing to pay.
  - prvit 4y ago
    How come rents for high-end real estate in Paris are vastly higher than in London? Sales prices on the other hand are vastly lower. Are the prices so high because people in Paris are willing to pay much higher rents more people in London? Or are they so high because renting in Paris is super risky for the landlord due to aggressive tenant protections?
    - colordrops 4y ago
      So to be clear, are rents in Paris vastly higher in general, or just for "high-end real estate"? If just the latter, then great, sounds like the policies are working.
      - prvit 4y ago
        Oh, rents in Paris are sky high regardless. Renting is also super difficult because landlords are terrified of tenants. It’s just easier to compare the high-end of the market because offering is similar and concentrated in central areas, whereas lower-end real estate is scattered across lots of very different areas.
  - nrmitchi 4y ago
    It's whatever maximum renters are willing to pay, combined with whatever minimum property owners are willing to accept and the availability of alternatives. Applying a cost increase across the board, in a way where everyone knows it was across the board, will reset the market floor. If California (just as an example) can out and said "There will be a flat $200/month tax on all home rentals" you can be damn sure that every available property would align to +$200 over the course of a year or two.
closedloop129 4y ago
It's counter-intuitive but the majority of housing has to be non-owner-occupied for prices to fall. >making property taxes substantially higher for non-owner-occupied property. >but everyone who owns property would be against it because they don't want to see their assets drop in value. After the initial dip, prices will rise again because residents will vote out every city government that tries to implement zoning that doesn't increase the value of their property.
- bluefirebrand 4y ago
  > It's counter-intuitive but the majority of housing has to be non-owner-occupied for prices to fall It seems likely the only way this happens is if the majority of real estate is owned by corporations or governments. Replace "corporations" with "wealthy nobility" and we don't need to imagine how that plays out. Historically that's never been good for workers.
  - closedloop129 4y ago
    Don't forget that you are living in a democracy. If the tenants can make the rules they don't have to repeat history. However, as the zoning laws show, they are short-sighted, and most likely will repeat history.
    - bluefirebrand 4y ago
      Democracy is a system that rises out of power to the people. People who own nothing have little power.
- ethbr0 4y ago
  > It's counter-intuitive but the majority of housing has to be non-owner-occupied for prices to fall. How do you see this being so?
yread 4y ago
There is a 10% tax when buying a house for renting (ie each house after the first one) in the Netherlands. It did stop some people from thinking of buying a house (like my wife) but there is still a huge shortage (and speculation/investment) so it didn't solve the problem. OTOH comparable per meter prices are way lower than London or Frankfurt
lazyjones 4y ago
This will just make rents more expensive.
softwarebeware 4y ago
Yeah, Vancouver BC actually is creating policies like taxing unoccupied housing at a higher rate, instituting a tax on the sale of homes to foreign buyers, and further regulations around real estate "commoditization" and these are effective tools. I don't know why people say it's a difficult problem. Cities are actually just looking the other way.
- shakes_mcjunkie 4y ago
  I find that a lot of the criticisms of taxation and better housing policy are boiled down to the bad faith, we can't try anything because it's too complicated, but really they mean this is going to cause me or my rich friends problems so don't do it.
  - the_only_law 4y ago
    Even better when an alternative proposed solutions is “give me and my rich friends more power”
- bamboozled 4y ago
  So basically a commonsense policy which the entire world has trouble implementing but it should. Nice.
joshlemer 4y ago
As others have said, this is an absolutely terrible idea and highly destructive to renters. There is simply no reason to boogeyman real estate investors so long as they are renting out the property. Renting is no less valid a form of housing than ownership and policies like you describe are already in place in many jurisdictions such as Ontario and it is already as we speak harming renters. For all the people saying "it doesn't matter how much you tax landlords, the market rate is what the renters are willing to pay", don't be silly. Just take your argument to the extreme then. Why stop at 4x, why not charge 10x, 100x, or 1000x? Obviously as you raise taxes on landlording, the number and/or quality of rental units will go down and/or the prices will go up. See Oh the Urbanity!'s recent video on the topic https://youtu.be/q3gtZcTdXaI https://youtu.be/q3gtZcTdXaI
- rojobuffalo 4y ago
  > Renting is no less valid...than ownership I think ownership is better because people value securing the shelter where they sleep. Renting is worse because you can't make decisions about how to improve land and architecture. You are only permitted to be there under a limited contractual agreement vs. being able to stay put until you decide to sell.
  - RHSeeger 4y ago
    You are welcome to think that. But it is an opinion, and not one shared by everyone. Both are equally valid options; in my opinion. I've been in times of my life where owning was better for me. I've been in times of my life where renting was better for me. At the times I was renting, I was very grateful for the landlord I had at the time (mostly; I've had a small number of landlords I did not like); they take on the risk and responsibility that wasn't something I wanted to deal with at the time.
    - ethbr0 4y ago
      People tend to talk about two different things when they say renting: control and affordability. Anti-renting people emphasize the control inherent in the relationship. Landlord sets the rules, including price; tenant required to abide. (Attempts to address the market by regulation here have had their share of severe side effects) Pro-renting people emphasize the affordability and ability to offer housing to those without access to the capital to purchase, as well as the shift of asset risk (physical and market) from the renter to landlord. The central evil seems not the existence of renting, but the ability of a landlord to capture underlying asset appreciation and charge rent. Coupled with areas of constrained supply, this leads to landlords getting richer and renters... not. Which seems unfair.
s1artibartfast 4y ago
There are multiple taxes on rental properties. You have to pay both income tax, and if you are a corporation you have to pay corporate taxes. That's roughly 20% and then another 20%. If you wanted to go with this approach, the better solution is to remove tax deductions for corporate residential real estate investment
- colinmhayes 4y ago
  Competent landlords don’t pay income tax because they use depreciation and reinvesting to claim 0 income.
  - s1artibartfast 4y ago
    That's exactly what I was pointing out in the post you responded to
    - deleted 4y ago
      [deleted]
washadjeffmad 4y ago
I think that also highlights that there's an investment class outside of the reach of normal citizens. If people can't pay to own property because it's easier for regulators and mega-owners to only have to deal with bulk-owners, then there's not a human-class. One cause is not enough resources in local government. Shrinking the abilities of the public servants until offices become autocratic, oligarchic hellholes is a long-favored strategy in consolidating authority. We're in an era that has to balance a lot of novel challenges, but they have seemed to tip in the favor of the few over the many for the past generation or two.
VirusNewbie 4y ago
Tax land value appreciation, that is the rent seeking part of the equation. You want to incentivize developers to create more units, you want to discourage people buying units hoping to bank on appreciation.
- turtlebits 4y ago
  Then you’ve pretty much forced every retired homeowner to sell and move when their neighborhood starts to become desired.
  - VirusNewbie 4y ago
    I didn’t mean as a property tax, I meant upon sale/transfer.
throw0101a 4y ago
> But I call b.s. on that. Residents would be able to afford new construction and maintenance if those things had lower price pressure. Including those on minimum wage? Including secondary education students who have no income? Including (international/visiting) folks on a (consulting) contract that may not want to settle in the location? There are many situations in which rental housing is the solution for people. > They should need to do a substantially better job at maintaining and increasing the value of real estate to justify owning it instead of a resident. "Increasing the value of real estate" is not the only metric to judge things by. Proving a valuable service to the public is another.
- ethbr0 4y ago
  > There are many situations in which rental housing is the solution for people. Then we can address that via rental vouchers to offset the taxes. Real estate has the same problem as healthcare, in that it's an enormously complicated system, where any adjustment always has negative outcomes. However, I agree with parent that the central and most critical failing is -- we are not incentivizing owner-occupied home construction at an accessible price point. And a critical component of that is decoupling {build and sell to commercial landlord} and {build and sell to occupying owner}. The former will always be able to deploy more capital, and thus drive up the asset price to levels the latter can't afford. And just to make it explicit: this is independent of density. You can have dense development that is still owner occupied (individual units).
carom 4y ago
So it will be more economical for me to convert my apartment building to a single family home? OK. Sounds like the ideal neolib hellscape, single family home suburbia as far as the eye can see. It is already difficult to make money in real estate. Your proposal would reduce housing stock.
AYBABTME 4y ago
This falls flat on its head when you consider that this would force a bunch of people in becoming small time landlords, with the inability to invest in their skills and competency by scaling up to multiple properties. Barely anyone would be interested in running multi-family real estate and they would migrate to commercial real estate. What would remain for residential is low density condos and shitty small time landlords with variable understanding of the expectations of their role, and variable notions of what's legal and what's harassment. Anything high density is too expensive (in time and capital) to do as a "coop" style endeavor and this means no high density residential would occur unless its luxury and expensive rent, to make up for the substantially higher taxes. I'm sorry but you can't make more housing appear by simply raising the barrier of entry and throwing sticks in $INSERT_EVIL_GROUP's front bicycle wheel. Ultimately, things need to be cheaper and easier to build, and this will come at the cost of some people's freedoms (expropriating their land for redevelopment, displacing people for redevelopment, preventing bike shedding about neighbors' preferences). It's easy to take a dump on so called rent-seeking landlords. But picture yourself becoming a landlord; imagine you're this newly minted, high spirited multi-family property owner and you want to do good for your neighborhood without becoming a charity and ruining yourself. Then look at what your options would be. In many US urban areas, there's already a lot of regulation in place that would drive you mad in your inability to make things better for your tenants and yourself in a sustainable manner. The rules literally push you into what you're seeing in the rental market (crappy apartments with high rent).
- sieabahlpark 4y ago
- LadyCailin 4y ago
  But the underlying point here (I think) is that people owning one home is higher priority than owning multiple homes. I’m not contradicting either of you, but it feels like you responded to a different question.
  - AYBABTME 4y ago
    I don't disagree (favoring personal ownership over multiple ownership), but then I'm not sure how this works out. Single-family homes everywhere? It's causing housing problems due to sky rocketing prices due to low density. So I think it's accepted that we need multi-family homes, to gain higher density housing. Ultimately skyscrapers, but in most case a few units per building. In most jurisdiction, the cost of developing a unit goes up the less dense the project is, so economical units sort of by definition mean packing more units per project. It works out if high density housing is built and then all sold as condos. People could pool together and buy land as a coop-style group, and then develop it as high density housing. But then its facing organizational hurdles (coop-style orgs don't have the best outcomes) and the whole thing need to survive years long timelines (to design, permit and build) while staying focused to avoid cost avalanches. Good luck! I don't have an agenda in this (unlike other commenters suggested) and would love to discover a better way of doing all this. I think the current system is flawed but I don't hear convincing alternatives. And what's there right now is better than a feudal system, that's for sure... Hey, back then, Lords were owner occupiers! How has that worked out for the peasants?
AndrewUnmuted 4y ago
carom 4y ago
If you are residing on your property rather than subdividing it and making it available up people who can't afford to buy you should pay way higher taxes, maybe 4x. Rental availability would explode and that would be the point.
antisthenes 4y ago
> If you are rent-seeking rather than residing on the property For the 10000th time, this isn't what rent-seeking means.
WalterBright 4y ago
Creating such huge distortions in a market always results in unintended consequences, usually counterproductive to the goal of them. For example, rent control makes for less units available to rent.
sampo 4y ago
> I would start by making property taxes substantially higher for non-owner-occupied property. You need to build more. Everything else is just redistributing scarcity one way or other.
thebigspacefuck 4y ago
I like this idea but I think it should apply to rental income and not property tax, i.e. tax any income from rent higher. I know a few people that own multiple homes but have kids or friends of family staying there.
KerrAvon 4y ago
Stuff like this always has unintended consequences. For example, if I inherit a house that I do not want to use as a primary residence and do not want to hold on to, I’d still get fucked over for 4x property taxes during the time it takes me to prepare the house for sale. You can’t write the rules with exceptions for every situation where you’d cause somebody unfair pain, because you can’t anticipate every such situation.
- Eddy_Viscosity2 4y ago
  You wouldn't be fucked over, you just got a house for nothing and then you have to pay taxes on it because you weren't living in it. I don't see why that would warrant an exception.
deleted 4y ago
[deleted]
jjav 4y ago
> I would start by making property taxes substantially higher for non-owner-occupied property. But that in turn means rents would go up substantially since the owner of that unit is now paying a lot more taxes on it because they rent it out instead of living in it themselves. If the desired goal is to incentivize everyone to own their home and get rid of rentals mostly, that may work. But if there are people who want to rent affordably, it doesn't.

capitalsigma 4y ago

Even if the vacancy rate is 10%, that hardly seems likely to cause a "crash."

MontyCarloHall 4y ago

>but everyone who owns property would be against it because they don't want to see their net-worth drop. They would be against it because it would mean they can never move, since they are now underwater on their mortgages. Most people who only own one property don’t care about its impact on their net worth unless they are planning on downsizing, since they can’t just liquidate the house to purchase other things as they can with other assets.

oblio 4y ago
It depends on where they want to move. For national policies prices should drop nation wide, ergo people would still be able to move inside the same country (probably 99% of relocations). And if they don't sell, they wouldn't care much. Yeah, annoying, but as long as you pay the installments, not much changes in practice.
- MontyCarloHall 4y ago
  >For national policies prices should drop nation wide, ergo people would still be able to move inside the same country No. Suppose I buy a million dollar house at 20% down. I thus owe $800k in principal to the bank. I live in the house for a few years, and build up $100k in additional equity beyond my down payment. If housing prices stayed the same, I could sell the house for $1M, use $700k of that to pay off my remaining principal, and use the remaining $300k towards my next $1M house. (If housing prices appreciated by 20%, I have $300k in equity and $200k in profit to put towards another $1.2M house.) Now suppose the housing market crashes by 50% and my house is worth $500k. If I sell my house for $500k, I still owe $200k of principal to the bank. I don’t have any leftover money to go towards another $500k house, or even a $0 house; instead, I have $200k in debt that buys me absolutely nothing.
  - ethbr0 4y ago
    The key component in this scenario is that the owner (debtor) is taking 100% of the value decrease, while the mortgage lender is taking a 0% decrease. In the event we implemented a market-wide adjustment, presumably we'd suspend business-as-usual to more evenly allocate that through the transition.
  - sbrother 4y ago
    Are there any financial products to help with this situation; ie allowing you to take out an $800k loan on the new house? Presumably this wouldn’t be any riskier for the bank than simply continuing to own the old underwater loan. Possibly less risky since the homeowner, living where they wanted to live, would have less incentive to simply walk away.
    - bombcar 4y ago
      The whole situation is confused; banks often have quite the ability to "go after you" for deficiency but in actuality they rarely do. And in some states, such as California, on the original purchase loan they cannot; it's non-recourse. But they sold your loan long ago, and trying to "do the math" and resell a new underwater one doesn't work.

nrmitchi 4y ago

The biggest thing missed when proposals like that is that not everyone wants to (or does it make sense to) buy a property. Making it 4x more expensive to own a rental property means that rent will be 4x more expensive for those that have to rent. If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.

ItsMonkk 4y ago
Not true, but I'm a Georgist so would be against the GP's targeting non-owner tax. Tax everyone according to the value of the unimproved value of their land. I can show you plenty of places with $3k+ rents in SF with prop 13 property taxes that have not changed their tax meaningfully in decades. Taxes have absolutely no effect on what the renter pays. The tenant is always paying the land value. It's just going straight to the landlord if you don't have a land value tax, and it goes to society if you do. If you are going to buy a valuable property, why do you need to pay twice[0]? If you adjust the land tax such that it equals the accruing land value, the price of land becomes zero. The local government can then use that tax money to do all sorts of things[1]. They can also use that as a way to reduce other taxes. Get rid of sales and income taxes. The Henry George Theorem states that a land tax should be able to solely fund governmental services. After all, all taxes come out of rents, so if you tax income, then that disincentives work, so you get less work. If you tax buildings, you get less buildings. If you tax land, there's always a set amount, so there is no harmful effects. [0]: https://www.youtube.com/watch?v=kxvXzM1mBWo https://www.youtube.com/watch?v=kxvXzM1mBWo [1]: https://www.youtube.com/watch?v=KVMGzkSgGXI https://www.youtube.com/watch?v=KVMGzkSgGXI
- nrmitchi 4y ago
  "Taxes have no effect on what the renter pays"; by this I assume you mean "market rate is market rate regardless of cost". Sure, to a point. The tax situation of my individual property does not impact the market rate. Just like how the market rate does not change if there is a mortgage on a property, or paid-in-full. If the entire market is faced by a new tax all at once, you will see rents rise. Costs across the board went up, and every property owner isn't going to operate at a loss. > Tax everyone according to the value of the unimproved value of their land. Sure. This is the exact opposite of what the parent post was suggesting, where they suggested taxing people different based on the use of the same land improvements.

bushbaba 4y ago

Remove depreciation, 1031b, and government backed loans for non owner occupied properties. That would do the most damage.

nrmitchi 4y ago
You don't even have to removal all of them; just make it so you can't use all of them. You're depreciating your asset? You don't get to depreciate, and deduct repair/maintenance costs. You're depreciating? You don't get to 1031 the asset as well (and avoid recapture). Regarding government back loans, I think you're right, ish. It's very weird that it's a thing at all, and that you can use subsidized loans for up to 4 unit properties. BUT I do believe this availability has been an on-ramp to a career in real estate, and a wealth building mechanism, for many, many previously-disadvantaged people. It's definitely been bastardized into something else over the last decade. That aside though, individuals are limited to a maximum of 10 government-backed morgages, and it becomes much more difficult to qualify for new ones after 4. While yes, that sounds like a lot, large real estate companies that are managing 10s of thousands of units are not utilizing these programs, and eliminating them would serve only to limit the "mom and pop landlords" that, frankly, tend to offer a lot more flexibility for tenants than large management companies do.

badpun 4y ago

Wouldn't that mostly just increase the rents? I.e. the landlords can offload the extra tax to their clients (renters).

elevatortrim 4y ago
That would be true if rent was a percentage on top of cost. But it is not, it is whatever maximum renters are willing to pay.
- prvit 4y ago
  How come rents for high-end real estate in Paris are vastly higher than in London? Sales prices on the other hand are vastly lower. Are the prices so high because people in Paris are willing to pay much higher rents more people in London? Or are they so high because renting in Paris is super risky for the landlord due to aggressive tenant protections?
  - colordrops 4y ago
    So to be clear, are rents in Paris vastly higher in general, or just for "high-end real estate"? If just the latter, then great, sounds like the policies are working.
    - prvit 4y ago
      Oh, rents in Paris are sky high regardless. Renting is also super difficult because landlords are terrified of tenants. It’s just easier to compare the high-end of the market because offering is similar and concentrated in central areas, whereas lower-end real estate is scattered across lots of very different areas.
- nrmitchi 4y ago
  It's whatever maximum renters are willing to pay, combined with whatever minimum property owners are willing to accept and the availability of alternatives. Applying a cost increase across the board, in a way where everyone knows it was across the board, will reset the market floor. If California (just as an example) can out and said "There will be a flat $200/month tax on all home rentals" you can be damn sure that every available property would align to +$200 over the course of a year or two.

closedloop129 4y ago

It's counter-intuitive but the majority of housing has to be non-owner-occupied for prices to fall. >making property taxes substantially higher for non-owner-occupied property. >but everyone who owns property would be against it because they don't want to see their assets drop in value. After the initial dip, prices will rise again because residents will vote out every city government that tries to implement zoning that doesn't increase the value of their property.

bluefirebrand 4y ago
> It's counter-intuitive but the majority of housing has to be non-owner-occupied for prices to fall It seems likely the only way this happens is if the majority of real estate is owned by corporations or governments. Replace "corporations" with "wealthy nobility" and we don't need to imagine how that plays out. Historically that's never been good for workers.
- closedloop129 4y ago
  Don't forget that you are living in a democracy. If the tenants can make the rules they don't have to repeat history. However, as the zoning laws show, they are short-sighted, and most likely will repeat history.
  - bluefirebrand 4y ago
    Democracy is a system that rises out of power to the people. People who own nothing have little power.
ethbr0 4y ago
> It's counter-intuitive but the majority of housing has to be non-owner-occupied for prices to fall. How do you see this being so?

yread 4y ago

There is a 10% tax when buying a house for renting (ie each house after the first one) in the Netherlands. It did stop some people from thinking of buying a house (like my wife) but there is still a huge shortage (and speculation/investment) so it didn't solve the problem. OTOH comparable per meter prices are way lower than London or Frankfurt

lazyjones 4y ago

This will just make rents more expensive.

softwarebeware 4y ago

Yeah, Vancouver BC actually is creating policies like taxing unoccupied housing at a higher rate, instituting a tax on the sale of homes to foreign buyers, and further regulations around real estate "commoditization" and these are effective tools. I don't know why people say it's a difficult problem. Cities are actually just looking the other way.

shakes_mcjunkie 4y ago
I find that a lot of the criticisms of taxation and better housing policy are boiled down to the bad faith, we can't try anything because it's too complicated, but really they mean this is going to cause me or my rich friends problems so don't do it.
- the_only_law 4y ago
  Even better when an alternative proposed solutions is “give me and my rich friends more power”
bamboozled 4y ago
So basically a commonsense policy which the entire world has trouble implementing but it should. Nice.

joshlemer 4y ago

As others have said, this is an absolutely terrible idea and highly destructive to renters. There is simply no reason to boogeyman real estate investors so long as they are renting out the property. Renting is no less valid a form of housing than ownership and policies like you describe are already in place in many jurisdictions such as Ontario and it is already as we speak harming renters. For all the people saying "it doesn't matter how much you tax landlords, the market rate is what the renters are willing to pay", don't be silly. Just take your argument to the extreme then. Why stop at 4x, why not charge 10x, 100x, or 1000x? Obviously as you raise taxes on landlording, the number and/or quality of rental units will go down and/or the prices will go up. See Oh the Urbanity!'s recent video on the topic https://youtu.be/q3gtZcTdXaI https://youtu.be/q3gtZcTdXaI

rojobuffalo 4y ago
> Renting is no less valid...than ownership I think ownership is better because people value securing the shelter where they sleep. Renting is worse because you can't make decisions about how to improve land and architecture. You are only permitted to be there under a limited contractual agreement vs. being able to stay put until you decide to sell.
- RHSeeger 4y ago
  You are welcome to think that. But it is an opinion, and not one shared by everyone. Both are equally valid options; in my opinion. I've been in times of my life where owning was better for me. I've been in times of my life where renting was better for me. At the times I was renting, I was very grateful for the landlord I had at the time (mostly; I've had a small number of landlords I did not like); they take on the risk and responsibility that wasn't something I wanted to deal with at the time.
  - ethbr0 4y ago
    People tend to talk about two different things when they say renting: control and affordability. Anti-renting people emphasize the control inherent in the relationship. Landlord sets the rules, including price; tenant required to abide. (Attempts to address the market by regulation here have had their share of severe side effects) Pro-renting people emphasize the affordability and ability to offer housing to those without access to the capital to purchase, as well as the shift of asset risk (physical and market) from the renter to landlord. The central evil seems not the existence of renting, but the ability of a landlord to capture underlying asset appreciation and charge rent. Coupled with areas of constrained supply, this leads to landlords getting richer and renters... not. Which seems unfair.

s1artibartfast 4y ago

There are multiple taxes on rental properties. You have to pay both income tax, and if you are a corporation you have to pay corporate taxes. That's roughly 20% and then another 20%. If you wanted to go with this approach, the better solution is to remove tax deductions for corporate residential real estate investment

colinmhayes 4y ago
Competent landlords don’t pay income tax because they use depreciation and reinvesting to claim 0 income.
- s1artibartfast 4y ago
  That's exactly what I was pointing out in the post you responded to
  - deleted 4y ago
    [deleted]

washadjeffmad 4y ago

I think that also highlights that there's an investment class outside of the reach of normal citizens. If people can't pay to own property because it's easier for regulators and mega-owners to only have to deal with bulk-owners, then there's not a human-class. One cause is not enough resources in local government. Shrinking the abilities of the public servants until offices become autocratic, oligarchic hellholes is a long-favored strategy in consolidating authority. We're in an era that has to balance a lot of novel challenges, but they have seemed to tip in the favor of the few over the many for the past generation or two.

VirusNewbie 4y ago

Tax land value appreciation, that is the rent seeking part of the equation. You want to incentivize developers to create more units, you want to discourage people buying units hoping to bank on appreciation.

turtlebits 4y ago
Then you’ve pretty much forced every retired homeowner to sell and move when their neighborhood starts to become desired.
- VirusNewbie 4y ago
  I didn’t mean as a property tax, I meant upon sale/transfer.

throw0101a 4y ago

> But I call b.s. on that. Residents would be able to afford new construction and maintenance if those things had lower price pressure. Including those on minimum wage? Including secondary education students who have no income? Including (international/visiting) folks on a (consulting) contract that may not want to settle in the location? There are many situations in which rental housing is the solution for people. > They should need to do a substantially better job at maintaining and increasing the value of real estate to justify owning it instead of a resident. "Increasing the value of real estate" is not the only metric to judge things by. Proving a valuable service to the public is another.

ethbr0 4y ago
> There are many situations in which rental housing is the solution for people. Then we can address that via rental vouchers to offset the taxes. Real estate has the same problem as healthcare, in that it's an enormously complicated system, where any adjustment always has negative outcomes. However, I agree with parent that the central and most critical failing is -- we are not incentivizing owner-occupied home construction at an accessible price point. And a critical component of that is decoupling {build and sell to commercial landlord} and {build and sell to occupying owner}. The former will always be able to deploy more capital, and thus drive up the asset price to levels the latter can't afford. And just to make it explicit: this is independent of density. You can have dense development that is still owner occupied (individual units).

carom 4y ago

So it will be more economical for me to convert my apartment building to a single family home? OK. Sounds like the ideal neolib hellscape, single family home suburbia as far as the eye can see. It is already difficult to make money in real estate. Your proposal would reduce housing stock.

AYBABTME 4y ago

This falls flat on its head when you consider that this would force a bunch of people in becoming small time landlords, with the inability to invest in their skills and competency by scaling up to multiple properties. Barely anyone would be interested in running multi-family real estate and they would migrate to commercial real estate. What would remain for residential is low density condos and shitty small time landlords with variable understanding of the expectations of their role, and variable notions of what's legal and what's harassment. Anything high density is too expensive (in time and capital) to do as a "coop" style endeavor and this means no high density residential would occur unless its luxury and expensive rent, to make up for the substantially higher taxes. I'm sorry but you can't make more housing appear by simply raising the barrier of entry and throwing sticks in $INSERT_EVIL_GROUP's front bicycle wheel. Ultimately, things need to be cheaper and easier to build, and this will come at the cost of some people's freedoms (expropriating their land for redevelopment, displacing people for redevelopment, preventing bike shedding about neighbors' preferences). It's easy to take a dump on so called rent-seeking landlords. But picture yourself becoming a landlord; imagine you're this newly minted, high spirited multi-family property owner and you want to do good for your neighborhood without becoming a charity and ruining yourself. Then look at what your options would be. In many US urban areas, there's already a lot of regulation in place that would drive you mad in your inability to make things better for your tenants and yourself in a sustainable manner. The rules literally push you into what you're seeing in the rental market (crappy apartments with high rent).

sieabahlpark 4y ago
LadyCailin 4y ago
But the underlying point here (I think) is that people owning one home is higher priority than owning multiple homes. I’m not contradicting either of you, but it feels like you responded to a different question.
- AYBABTME 4y ago
  I don't disagree (favoring personal ownership over multiple ownership), but then I'm not sure how this works out. Single-family homes everywhere? It's causing housing problems due to sky rocketing prices due to low density. So I think it's accepted that we need multi-family homes, to gain higher density housing. Ultimately skyscrapers, but in most case a few units per building. In most jurisdiction, the cost of developing a unit goes up the less dense the project is, so economical units sort of by definition mean packing more units per project. It works out if high density housing is built and then all sold as condos. People could pool together and buy land as a coop-style group, and then develop it as high density housing. But then its facing organizational hurdles (coop-style orgs don't have the best outcomes) and the whole thing need to survive years long timelines (to design, permit and build) while staying focused to avoid cost avalanches. Good luck! I don't have an agenda in this (unlike other commenters suggested) and would love to discover a better way of doing all this. I think the current system is flawed but I don't hear convincing alternatives. And what's there right now is better than a feudal system, that's for sure... Hey, back then, Lords were owner occupiers! How has that worked out for the peasants?

AndrewUnmuted 4y ago

carom 4y ago

If you are residing on your property rather than subdividing it and making it available up people who can't afford to buy you should pay way higher taxes, maybe 4x. Rental availability would explode and that would be the point.

antisthenes 4y ago

> If you are rent-seeking rather than residing on the property For the 10000th time, this isn't what rent-seeking means.

WalterBright 4y ago

Creating such huge distortions in a market always results in unintended consequences, usually counterproductive to the goal of them. For example, rent control makes for less units available to rent.

sampo 4y ago

> I would start by making property taxes substantially higher for non-owner-occupied property. You need to build more. Everything else is just redistributing scarcity one way or other.

thebigspacefuck 4y ago

I like this idea but I think it should apply to rental income and not property tax, i.e. tax any income from rent higher. I know a few people that own multiple homes but have kids or friends of family staying there.

KerrAvon 4y ago

Stuff like this always has unintended consequences. For example, if I inherit a house that I do not want to use as a primary residence and do not want to hold on to, I’d still get fucked over for 4x property taxes during the time it takes me to prepare the house for sale. You can’t write the rules with exceptions for every situation where you’d cause somebody unfair pain, because you can’t anticipate every such situation.

Eddy_Viscosity2 4y ago
You wouldn't be fucked over, you just got a house for nothing and then you have to pay taxes on it because you weren't living in it. I don't see why that would warrant an exception.

deleted 4y ago

[deleted]

jjav 4y ago

> I would start by making property taxes substantially higher for non-owner-occupied property. But that in turn means rents would go up substantially since the owner of that unit is now paying a lot more taxes on it because they rent it out instead of living in it themselves. If the desired goal is to incentivize everyone to own their home and get rid of rentals mostly, that may work. But if there are people who want to rent affordably, it doesn't.