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People usually own multiple properties (outside of main home/vacation home, at least) to rent them to others. So they will just pass that cost to their renters,
by cableshaft 3y ago
People usually own multiple properties (outside of main home/vacation home, at least) to rent them to others. So they will just pass that cost to their renters, and make rent more expensive.
Although I guess there could be some number of properties where that becomes untenable as well.
- theonlybutlet 3y agoIt encourages supply and liquidity in the market. Individuals will see an opportunity to undercut the large investors if they're hoarding property, so will build new property if they can't get their hands on existing properties. And if it is no longer feasible they're likely to sell rather than hoard for property appreciation.
- ryandrake 3y agoIf they could simply "pass that cost to their renters" why wouldn't they just raise rents to that level now, absent any tax increase? The point of this progressively increasing tax would be to raise the landlord's costs to the point where the market actually cannot bear a rent increase--which would disincentivize using the property as an investment.
- traverseda 3y agoPresumably it's a coordination problem. If everyone raises rent you can too. If your rent is abnormally high you'll either have a hard time finding tenants or get abnormal tenants.
- ryandrake 3y agoBut in this scheme, not every landlord will have the increased tax and thus need to raise rent--only the ones with many properties. So that behavior becomes disincentivized.