5 ms·

If you’re getting £1000 extra a month and I say your rent is now £1000 extra a month, you can’t and won’t say no. If you say no, I’ll just get someone else in w

If you’re getting £1000 extra a month and I say your rent is now £1000 extra a month, you can’t and won’t say no. If you say no, I’ll just get someone else in who will give me their free money. As you’re competing with them for the same goods, you’ll have no choice but to pay the same. Meaning it’s made no difference for you as the primary costs in your life are limited by supply. For someone who owns their own house and makes £10,000 a month, it’s meaningless. Their inflexible goods are already covered. So they’re free to spend it in holidays and working less.

underlipton 3y ago
That's unrealistic. If it's purely supply and demand, the premium landlords will be able to command out of that 1000 bucks will be somewhat less than the total - and perhaps significantly less, if prospective tenants are savvy enough to hold out collectively. The only way you see the entire thing co-opted for rent is if landlords were to collude and refuse to break rank on pricing. But there's no way that would happen, since it'd be illegal.
- RestlessMind 3y ago
  > if prospective tenants are savvy enough to hold out collectively and why would that be the case? Seems like a hard coordination problem to me.
  - geysersam 3y ago
    But collective rent bargaining is common so it's clearly not impossible.
  - underlipton 3y ago
    Because there are multiple concrete examples of class solidarity just in the past year which point to a shift in consciousness about such issues. Covid gains were stolen; good luck doing it twice in a generation (in the hypothetical case of UBI in the next few years).
geysersam 3y ago
If that was really the case then all surplus would already be eaten by landlords and that clearly isn't the case. In some parts rents are absolutely very high but that's not everywhere. If rents increase more apartments will be built, reducing the ability of landlords to extract rent. But I agree that inflation is likely to increase if people get more money to spend. However, I think that would mainly be over a transitional period while the economy adapts to the new demand.
- justinclift 3y ago
  > If that was really the case then all surplus would already be eaten by landlords ... That's what seems to be happening in at least Sydney, Australia. :(
- sudosysgen 3y ago
  Not all of it, but real estate does very strongly correlate with income, and for lower income quintiles it can eat the surplus.
  - hansvm 3y ago
    Lower income quintiles have the surplus eaten because their consumption of raw materials and labor is break-even with their production of raw materials and labor. Even if by magic land were free and construction costs were negligible, a 1-bed 600 sq ft living space would still take a decade for the average bottom-quintile family to pay for the raw materials in the US, saving nearly everything other than rice and beans, healthcare, and other such niceties, and assuming no major calamities on the way. Landlords charging on par with that same rate in rent isn't evidence that were the bottom quintile of incomes to increase by $1k/mo their rents would as well.
robocat 3y ago
> For someone who owns their own house and makes £10,000 a month, it’s meaningless. Their inflexible goods are already covered I disagree. Competitive middle classers would often climb up the property ladder and spend the £1,000 more on their mortgage. Mortgage payments are often a large percentage of middle class costs that constrains disposable spending (certainly true for me). I generally agree that say rent might rise to take up any extra income from renters. But a similar dynamic occurs for owners. Especially when you look at the group level where house prices are indirectly set by householder incomes. House buyers compete with each other for how much they can pay in mortgage repayments, similarly to how renters compete with each other.
Buttons840 3y ago
> If you’re getting £1000 extra a month and I say your rent is now £1000 extra a month Two people, each making an extra 1000 a month become roommates and collectively they have an extra 500 a month. If landlords try to exploit this, make it illegal for them to ask about extra roommates (within reason). Another positive market wide force that isn't accounted for is the added safety net will enable more businesses to start and enter the market and ensure that companies are competing. When markets become small and filled with old companies, those companies can form a nefarious "trust" where they collude and stop competing. It's like the Christmas Truce of WW1; opposing forces gradually lessened hostilities for mutual benefit, trust was built, and eventually both sides went into no-mans-land, exchanged food and prisoners, and even played games. This doesn't happen if there's a fresh flow of new soldiers through the trenches, a trust can never form and actions for mutual benefit never happen. It's good when soldiers in WW1 achieve trust and use it for peace, it's bad when a few companies in a stagnant market achieve trust and use it to cease competition (aka, collusion).
- randomdata 3y ago
  > If landlords try to exploit this, make it illegal for them to ask about extra roommates (within reason). What does that accomplish? The landlord will ultimately find out about the extra $1,000 available to spend even without knowing of a roommate through simple price discovery.
- mbrumlow 3y ago
  It won’t matter. They don’t need to know about the room mates. They know everybody now has $1000 which means they simply raise the rent. I would wager that minimum rent becomes close to if not $1000.
  - red-iron-pine 3y ago
    and? minimum rent becomes the government stipend so you now live rent-free. the cash you make at your otherwise crappy, barely-keep-the-lights-on minimum-wage job is now going to pay for other things.
mitthrowaway2 3y ago
Unless they can find someone willing to rent for 900? That's how markets work. Suddenly it's more profitable than it used to be to house the homeless.

underlipton 3y ago

That's unrealistic. If it's purely supply and demand, the premium landlords will be able to command out of that 1000 bucks will be somewhat less than the total - and perhaps significantly less, if prospective tenants are savvy enough to hold out collectively. The only way you see the entire thing co-opted for rent is if landlords were to collude and refuse to break rank on pricing. But there's no way that would happen, since it'd be illegal.

RestlessMind 3y ago
> if prospective tenants are savvy enough to hold out collectively and why would that be the case? Seems like a hard coordination problem to me.
- geysersam 3y ago
  But collective rent bargaining is common so it's clearly not impossible.
- underlipton 3y ago
  Because there are multiple concrete examples of class solidarity just in the past year which point to a shift in consciousness about such issues. Covid gains were stolen; good luck doing it twice in a generation (in the hypothetical case of UBI in the next few years).

geysersam 3y ago

If that was really the case then all surplus would already be eaten by landlords and that clearly isn't the case. In some parts rents are absolutely very high but that's not everywhere. If rents increase more apartments will be built, reducing the ability of landlords to extract rent. But I agree that inflation is likely to increase if people get more money to spend. However, I think that would mainly be over a transitional period while the economy adapts to the new demand.

justinclift 3y ago
> If that was really the case then all surplus would already be eaten by landlords ... That's what seems to be happening in at least Sydney, Australia. :(
sudosysgen 3y ago
Not all of it, but real estate does very strongly correlate with income, and for lower income quintiles it can eat the surplus.
- hansvm 3y ago
  Lower income quintiles have the surplus eaten because their consumption of raw materials and labor is break-even with their production of raw materials and labor. Even if by magic land were free and construction costs were negligible, a 1-bed 600 sq ft living space would still take a decade for the average bottom-quintile family to pay for the raw materials in the US, saving nearly everything other than rice and beans, healthcare, and other such niceties, and assuming no major calamities on the way. Landlords charging on par with that same rate in rent isn't evidence that were the bottom quintile of incomes to increase by $1k/mo their rents would as well.

robocat 3y ago

> For someone who owns their own house and makes £10,000 a month, it’s meaningless. Their inflexible goods are already covered I disagree. Competitive middle classers would often climb up the property ladder and spend the £1,000 more on their mortgage. Mortgage payments are often a large percentage of middle class costs that constrains disposable spending (certainly true for me). I generally agree that say rent might rise to take up any extra income from renters. But a similar dynamic occurs for owners. Especially when you look at the group level where house prices are indirectly set by householder incomes. House buyers compete with each other for how much they can pay in mortgage repayments, similarly to how renters compete with each other.

Buttons840 3y ago

> If you’re getting £1000 extra a month and I say your rent is now £1000 extra a month Two people, each making an extra 1000 a month become roommates and collectively they have an extra 500 a month. If landlords try to exploit this, make it illegal for them to ask about extra roommates (within reason). Another positive market wide force that isn't accounted for is the added safety net will enable more businesses to start and enter the market and ensure that companies are competing. When markets become small and filled with old companies, those companies can form a nefarious "trust" where they collude and stop competing. It's like the Christmas Truce of WW1; opposing forces gradually lessened hostilities for mutual benefit, trust was built, and eventually both sides went into no-mans-land, exchanged food and prisoners, and even played games. This doesn't happen if there's a fresh flow of new soldiers through the trenches, a trust can never form and actions for mutual benefit never happen. It's good when soldiers in WW1 achieve trust and use it for peace, it's bad when a few companies in a stagnant market achieve trust and use it to cease competition (aka, collusion).

randomdata 3y ago
> If landlords try to exploit this, make it illegal for them to ask about extra roommates (within reason). What does that accomplish? The landlord will ultimately find out about the extra $1,000 available to spend even without knowing of a roommate through simple price discovery.
mbrumlow 3y ago
It won’t matter. They don’t need to know about the room mates. They know everybody now has $1000 which means they simply raise the rent. I would wager that minimum rent becomes close to if not $1000.
- red-iron-pine 3y ago
  and? minimum rent becomes the government stipend so you now live rent-free. the cash you make at your otherwise crappy, barely-keep-the-lights-on minimum-wage job is now going to pay for other things.

mitthrowaway2 3y ago

Unless they can find someone willing to rent for 900? That's how markets work. Suddenly it's more profitable than it used to be to house the homeless.