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To see it from the other side, I’d suggest trying to reframe your mindset about rent. As an example, let’s take a homeowner who rents their old house to someon

To see it from the other side, I’d suggest trying to reframe your mindset about rent. As an example, let’s take a homeowner who rents their old house to someone when they purchase a second home. The question is, what value are they providing to the renter to justify the huge cost? The rent payment must cover the mortgage payment and maintenance or else the landlord would be loosing money. The landlord essentially ends up with a free house, while the renter ends up loosing many tens or hundreds of thousands of dollars, and at the end of the lease, they have nothing. The only value the landlord provided was happening to own an asset that’s in huge demand. If that asset was abundant, the renter would very likely be able to buy their own and be much better off. Rent-seeking behavior (which is drastically incentivized when houses are such a valuable asset) is pretty much only a negative for society for two reasons: 1. It makes many people poorer without any equity to show for their huge financial commitment. 2. It makes housing more expensive, which also makes people poorer. 3. A poorer society means people have less money to spend on products that someone actually put in work/effort to produce. The basic idea is that a landlord is generally not producing a product or putting in any meaningful effort. (The actual work is contracted out and paid for by rent.) They’re just profiting off of an asset they got lucky / rich enough to own —- which by itself isn’t that much of a problem, except housing is a basic human necessity/right. So why shouldn’t society be profiting off of the asset’s (land’s) value? But this line of thinking means you have to turn off that “capitalist greed” mindset that everyone gets by default.

rank0 4y ago
> The question is, what value are they providing to the renter to justify the huge cost? Seriously? They took on the risk of a mortgage for the house! They have to service that debt for decades. Renters can go wherever they want. Imagine a world with no landlords…now you have to purchase a property to not be homeless.
robocat 4y ago
I actually believe rent is often terrible for society, and I have seen the horrific social problems caused by investors in my own suburbs (Brighton, Christchurch). I have heard it said “rotten houses filled with rotten people”: wooden houses with zero maintenance left to rot by investors waiting for market to improve so they can make a profit, terrible houses results in desperate people renting, resulting in a broken society. I don’t blame poor people, but there are definite problems that they come with. Same problem with Brighton Mall (majority owned by two wealthy Christchurch families) that have zero incentive to invest their own money and every incentive to get local government to develop the area. If shops in Brighton Mall were owned by individuals, I suspect it would be a pretty nice place (not a wasteland). If more homes in Brighton were owned by individuals, they spend time and money to make them better, and they have incentives to create a common community for themselves. My point is not “capitalist greed”, it is that taking an individuals lifetime savings away from them is very bad I think.
- nckthrn 4y ago
  Every time I go through Brighton I am struck by how if it was anywhere else in the world it would be an expensive neighbourhood. I never knew about the ownership of the mall.
  - robocat 4y ago
    My theory is the dynamics I mentioned above. Investors waiting for it to boom so they can cash in, however investors allow decay so values never rise. Meanwhile be very careful buying anything in Brighton within the 1:50 year floodzone which is a huge percentage of the homes (And beware in much of Christchurch). You think your odds are okay, but sea level rise means the risk increases over 20 years, and the sum of the risk ends up very freaking high over decades. If there is flooding, it will be like the earthquake. Prices will drop drastically within whole suburbs, houses will become uninsurable, and as-is prices will occur. Some suburbs will become very undesirable, which will have severe negative value. If you have a mortgage, you can lose all your money due to gearing. Meanwhile over time insurance premiums are going sky-high - mine went up 33% last year and I’m on a higher part! Don’t buy in floodzone areas. I am going to buy a bare property on the hills to hedge my potential losses since I can’t insure against sea level rise. If there is sea level rise, my property will decrease in value, but hopefully that is offset by an increase in value of a hillside property. Cheers
sokoloff 4y ago
> what value are they providing to the renter to justify the huge cost? Um, a place to live? That’s something that obviously has huge value to people. I rented 5 different places for a cumulative ~12 years post-college and each of them were in circumstances where I didn’t want the commitment and hassles of property ownership. One place I lived for 6 years and knowingly and happily paid more than the investor’s mortgage for that time. (He is a real estate agent/investor and we talked several times about the topic.) He got economic benefit; I got shelter without a long commitment and without tying up much money up-front. If I need two years’ worth of shelter, it’s convenient to be able to buy that amount rather than buying a property that yields an infinite series of it and selling that two years later.
jjav 4y ago
> So why shouldn’t society be profiting off of the asset’s (land’s) value? > But this line of thinking means you have to turn off that “capitalist greed” mindset that everyone gets by default. That sounds idealistic. Society won't be benefitting from a LVT. The ones who benefit are the rich outsiders who can now push out longtime residents from an area so they can take over and build some highrises for profit. So capitalist greed at its finest.

rank0 4y ago

> The question is, what value are they providing to the renter to justify the huge cost? Seriously? They took on the risk of a mortgage for the house! They have to service that debt for decades. Renters can go wherever they want. Imagine a world with no landlords…now you have to purchase a property to not be homeless.

robocat 4y ago

I actually believe rent is often terrible for society, and I have seen the horrific social problems caused by investors in my own suburbs (Brighton, Christchurch). I have heard it said “rotten houses filled with rotten people”: wooden houses with zero maintenance left to rot by investors waiting for market to improve so they can make a profit, terrible houses results in desperate people renting, resulting in a broken society. I don’t blame poor people, but there are definite problems that they come with. Same problem with Brighton Mall (majority owned by two wealthy Christchurch families) that have zero incentive to invest their own money and every incentive to get local government to develop the area. If shops in Brighton Mall were owned by individuals, I suspect it would be a pretty nice place (not a wasteland). If more homes in Brighton were owned by individuals, they spend time and money to make them better, and they have incentives to create a common community for themselves. My point is not “capitalist greed”, it is that taking an individuals lifetime savings away from them is very bad I think.

nckthrn 4y ago
Every time I go through Brighton I am struck by how if it was anywhere else in the world it would be an expensive neighbourhood. I never knew about the ownership of the mall.
- robocat 4y ago
  My theory is the dynamics I mentioned above. Investors waiting for it to boom so they can cash in, however investors allow decay so values never rise. Meanwhile be very careful buying anything in Brighton within the 1:50 year floodzone which is a huge percentage of the homes (And beware in much of Christchurch). You think your odds are okay, but sea level rise means the risk increases over 20 years, and the sum of the risk ends up very freaking high over decades. If there is flooding, it will be like the earthquake. Prices will drop drastically within whole suburbs, houses will become uninsurable, and as-is prices will occur. Some suburbs will become very undesirable, which will have severe negative value. If you have a mortgage, you can lose all your money due to gearing. Meanwhile over time insurance premiums are going sky-high - mine went up 33% last year and I’m on a higher part! Don’t buy in floodzone areas. I am going to buy a bare property on the hills to hedge my potential losses since I can’t insure against sea level rise. If there is sea level rise, my property will decrease in value, but hopefully that is offset by an increase in value of a hillside property. Cheers

sokoloff 4y ago

> what value are they providing to the renter to justify the huge cost? Um, a place to live? That’s something that obviously has huge value to people. I rented 5 different places for a cumulative ~12 years post-college and each of them were in circumstances where I didn’t want the commitment and hassles of property ownership. One place I lived for 6 years and knowingly and happily paid more than the investor’s mortgage for that time. (He is a real estate agent/investor and we talked several times about the topic.) He got economic benefit; I got shelter without a long commitment and without tying up much money up-front. If I need two years’ worth of shelter, it’s convenient to be able to buy that amount rather than buying a property that yields an infinite series of it and selling that two years later.

jjav 4y ago

> So why shouldn’t society be profiting off of the asset’s (land’s) value? > But this line of thinking means you have to turn off that “capitalist greed” mindset that everyone gets by default. That sounds idealistic. Society won't be benefitting from a LVT. The ones who benefit are the rich outsiders who can now push out longtime residents from an area so they can take over and build some highrises for profit. So capitalist greed at its finest.