12 ms·

If you make it financially risky to own a rental property you're also making it more risky and thus less profitable to buy and rent out apartments. This hurts b

If you make it financially risky to own a rental property you're also making it more risky and thus less profitable to buy and rent out apartments. This hurts both renters and the potential landlords. It would be much better to just increase property taxes.. Speaking as a Dane, this kind kind of economically illiterate leftist lawlessness is an important reason why Spain is poorer both poorer and has a worse welfare state than Denmark.

dr__mario 2y ago
Ok, but first: is it financially risky right now to own properties? No, based on the data we have. Second: can renters be hurt even more? Are landlords the most vulnerable people right now? The situation is pretty awful right now, while at the same time there are people whose sole contribution to society is "owning flats". And I agree on increasing property taxes (any progressive taxes over capital would do).
- dr__mario 2y ago
  BTW, I'd love to recommend a book that explains all this much better than I would do. Unfortunately, I think it's only in Spanish: "La España de las piscinas" (The Spain of Swimming Pools).
  - peter335 2y ago
    Thanks for the recommendation!
- peter335 2y ago
  I think these are understandable and well intended questions! But they also makes it seem like you're not very familiar with standard economic analysis. I would encourage you to read The Rent is Too Damn High by Yglesias which is by an american (leftist) who I think has a much better set of ideas for improving the lives of renters than "occupation friendly" housing regulations and other "zero sum" ideas. And yes, buying and administering rental properties is societally valueable just like running a bakery, restaurant or software consultancy is. https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B...
  - harimau777 2y ago
    Can you give any information on what he advocates? I wonder if the difference could be that the policies that he advocate would require bought and paid for politicians to act while squatting is something that an individual can do?
    - peter335 2y ago
      The one line explanation is that politicians should allow people to build more housing.
    - HDThoreaun 2y ago
      Its very simple. We need to build more housing. This can be done via zoning reform combined with land value tax to punish speculators.
  - zrn900 2y ago
    The difference is that those occupation friendly laws work and force real estate owners to actually rent out their properties rather than let them sit empty to appreciate value. Whereas the ideas of a person that only exist in a book are just ideas that exist in a book.
    - bdowling 2y ago
      Allowing occupation of vacant properties by squatters because there isn't enough housing supply is like allowing stealing food from farms because there isn’t enough food supply. It’s demoralizing to the producers and maintainers of the resource and does not encourage further investment in the activity.
      - zrn900 2y ago
        > Allowing occupation of vacant properties by squatters because there isn't enough housing supply is like allowing stealing food from farms because there isn’t enough food supply Love these religious-sounding sermons. Im telling what is happening here, a lot of 'free market' types are preaching to me that what is happening here is not happening and something else should be happening per the magic of 'free market' or capitalism or whatever. Hearing these, one understands who the US ended up with housing being unaffordable for 99% of Americans...
- bdowling 2y ago
  > Are landlords the most vulnerable people right now? Increasing risk will eliminate a lot of the "mom and pop" landlords (widows, former small-business owners, retirees, etc.). If it is too risky to own only a few extra condo units or a single small apartment building, then those properties will go to large corporate landlords. > there are people whose sole contribution to society is "owning flats". Landlords make sure the utilities (water, electricity, heat, etc.) work, that the roof doesn't leak, fix plumbing issues when they arise, take care of pest infestations, etc. Even landlords who don't personally fix things are employing managers and tradespeople. And with big corporate owners, the shareholders are usually pension funds which effectively are the retirement savings of people who have already "contributed to society".
  - carlosjobim 2y ago
    Is it worth the major part of a full time worker's income to have somebody take care of those things in the rare occasion they happen? Most normal people can easily fix their plumbing issues, a leaky roof, termites and such in a couple of days with a few hundreds of dollars in budget. Landlords generally spend much less than 5% of their yearly rent income on maintenance. If they actually do something to improve an apartment, that is just an investment in their own real estate, that they own 100% even after having other people pay for it several times over during decades. Edit: Or look at it this way: Would you hire and pay somebody a good salary for working maybe 5 or 10 days per year for you?
    - bdowling 2y ago
      > that they own 100% You might be surprised to learn that many small rental properties are heavily mortgaged. Along with insurance and property taxes, the biggest cost is usually mortgage interest. Some owners even lose money for a few years until the rents rise to meet the costs so that they can break even. (These owners are playing the long game, believing that rent and property values will go up over time and eventually their investment will be a good one compared to their other investment options.)
      - 2y ago
harperlee 2y ago
> you're also making it more risky and thus less profitable to buy and rent out apartments You would be surprised about the sheer number of spaniards that would welcome this second-order effect. In the last ~10 years, renting has skyrocketed, due to the discovery of the spanish renting market by international money, and renting laws relaxation (demand side). Meanwhile, this has not increased the supply of homes, as it is felt that there is oversupply, the demand is very concentrated on selected cities, and the turnaround of building to rent or sell is long. This double-whammy has made renting quite onerous, and buying directly out of reach, for a lot of people. Some extra tidbits: - Buying: Upwards of 40% of home purchase is without mortgage (not a pattern of someone buying for the first time) - Renting: In Madrid, on average 62% of salary before taxes goes to renting; 58% in Barcelona (https://www.fotocasa.es/fotocasa-life/alquiler/los-espanoles-destinaron-casi-la-mitad-de-su-salario-al-pago-del-alquiler-en-2023/ https://www.fotocasa.es/fotocasa-life/alquiler/los-espanoles...) (how is that even feasible? well, young people end up just renting a room)
- Manuel_D 2y ago
  I think you misunderstood what the above commenter meant when they wrote that risk of squatters makes it "less profitable to buy and rent out apartments". Because of the additional risks of squatters, landowner will either have to take additional security measures (and make up the costs with higher rent) or accept the risk of squatters (and make up that risk with higher rent). In either case, the rent getsor expensive.
  - harperlee 2y ago
    No, I got it. I just think that would mainly mean investors exit the market. If it is less profitable, they either further raise the prices or they get out of the market; the ratio of those two options depends on price elasticity. And prices don't have a lot of room to grow further in my opinion... unless of course the wages grow quickly (and minimum wage indeed has done it in the last 5 years). But then the country needs to be more productive or people get poor (fired!), which is also not good for the renting business, etc. At the end of the day you're betting on the spanish market either squeezing people further, or gaining productivity real quick. And real estate is not very liquid, yet is typically long-term, and those investors are risk averse. So... there will be some that will exit the market.
jorvi 2y ago
Currently there is a hard limit on how many properties per year can be built due to lack of construction workers + training positions for new workers + being sure of work in the next decade(s) due to economic cycles. Since the factor limiting supply is not cost or demand, prices keep ever-increasing with no gains for society; just filling the coffers of the haves. You should really watch out with insults of economic illiteracy :)
- peter335 2y ago
  I stand by my characterization, this comment is symptomatic of the same problem. That a country with high unemployment has the nr of workers in the construction sector as the major limitation in construction of new housing seems very implausible. What about zoning laws? To the extent a country with high unemployment can’t find enough construction workers it’s likely to be some kind of government/regulatory failure. Read Matthew Yglesias, he’s great
  - zrn900 2y ago
    > That a country with high unemployment has the nr of workers in the construction sector as the major limitation in construction of new housing seems very implausible The rest of the world is not the US, and people don't have to work for dimes in jobs that can go away the next day just because they would starve or cant afford healthcare if they don't. As a result, people prefer stable jobs. If that sounds implausible to you, it is a sign of how perverted the mentality of your society has become that you expect people to be like disposable lemmings that will pour out to whatever pays them some money. > What about zoning laws? To the extent a country with high unemployment can’t find enough construction workers it’s likely to be some kind of government/regulatory failure. Read Matthew Yglesias, he’s great You don't know anything about the country that you speak about. You are referring to an American who has his ideas existing only in various books. Dont make holistic statements without knowing enough about what you are talking about. In this case, an entirely different country and society.
  - jorvi 2y ago
    High unemployment? Boomers retiring will create a permanent labor shortage for the foreseeable future. People just don’t want to be construction workers, and who can blame them? Especially with how construction workers got screwed over after 2008. That nuked the construction sector so hard that employement in construction has just barely recovered to 2008 levels. It would be beautiful if housing was the pure demand-supply curve that many claim it is- but currently it isn’t. Letting the market solve the housing problem doesn’t create additional future housing as that is blocked by house construction output, all it does is allow maximizing profit on existing real estate. With the extreme anger and complete societal gridlock that the first world housing crisis is fomenting, if the fix was “just unregulate lol” politicians would have done that by now.
zrn900 2y ago
> Speaking as a Dane, this kind kind of economically illiterate leftist lawlessness is an important reason why Spain is poorer both poorer and has a worse welfare state than Denmark. If only Spain could profit from helping murder brown people in 3rd world countries overseas and by speculating on banking, then forcing the bailout of those sunken PRIVATE banks on other countries and then forcing them to privatize their national assets to buy those assets dirt cheap - like how Northern Europe did to Southern Europe, including Spain. Forcing the Spanish taxpayer to bail out sunken private Northern European banks and then forcing austerity on them to have them privatize their society. The biggest bank scam of the century in every way. And yet, all of you Northern Europeans seem to want to move south to that 'economically illiterate' society and its 'failing' welfare state for some reason. To the extent that you literally filled out some cities and zones. What you say and what you do contradict. > illiterate You don't know even the topic that you are talking about, yet you are talking about economic illiteracy. And the one thing that you have that you refer to, is an American author and its book. As if a random American author is the all-determining authority for anything. > you're also making it more risky and thus less profitable to buy and rent out apartments Okupas force the property owners to rent their properties to avoid losing them. It increases property available for rent - does not decrease it. Again, you don't know what you are talking about, and no, Matthew Yglesias, the glorious American author that you slapped everywhere in this thread as if he was a prophet, is not a reference that changes this particular phenomenon either. This is what happens where 'economically illiterate leftist lawlessness' doesn't exist. https://www.cbsnews.com/news/homes-for-sale-affordable-housing-prices/ https://www.cbsnews.com/news/homes-for-sale-affordable-housi...
- nec4b 2y ago
  >> If only Spain could profit from helping murder brown people in 3rd world countries overseas You mean like when Spain colonized Americas?
  - zrn900 2y ago
    If only. Spain declared all Native Americans Spanish subjects with equal rights in 1519. Then they proceeded to hang in public any governor who violated those rights. That's why there are 7 million 'pure blooded' (whatever that means) Native Americans in South America today and there are races like Mexican. What's more, Spain treated the 'colonies' as parts of Spain and it spent all its money developing them. From the first university in the Americas to all kinds of hospitals, schools, infrastructure was built by the Spanish state with Spanish money. Thats why Spain lost the imperial race: Building up the locals instead of exploiting them - leaving aside not murdering them all to replace them like the Anglosaxons did.
yazzku 2y ago
100%. We have the stupidest housing laws. "economically illiterate leftist lawlessness" is the exact way to put this, and I myself usually tend towards the left.

dr__mario 2y ago

Ok, but first: is it financially risky right now to own properties? No, based on the data we have. Second: can renters be hurt even more? Are landlords the most vulnerable people right now? The situation is pretty awful right now, while at the same time there are people whose sole contribution to society is "owning flats". And I agree on increasing property taxes (any progressive taxes over capital would do).

dr__mario 2y ago
BTW, I'd love to recommend a book that explains all this much better than I would do. Unfortunately, I think it's only in Spanish: "La España de las piscinas" (The Spain of Swimming Pools).
- peter335 2y ago
  Thanks for the recommendation!
peter335 2y ago
I think these are understandable and well intended questions! But they also makes it seem like you're not very familiar with standard economic analysis. I would encourage you to read The Rent is Too Damn High by Yglesias which is by an american (leftist) who I think has a much better set of ideas for improving the lives of renters than "occupation friendly" housing regulations and other "zero sum" ideas. And yes, buying and administering rental properties is societally valueable just like running a bakery, restaurant or software consultancy is. https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B...
- harimau777 2y ago
  Can you give any information on what he advocates? I wonder if the difference could be that the policies that he advocate would require bought and paid for politicians to act while squatting is something that an individual can do?
  - peter335 2y ago
    The one line explanation is that politicians should allow people to build more housing.
  - HDThoreaun 2y ago
    Its very simple. We need to build more housing. This can be done via zoning reform combined with land value tax to punish speculators.
- zrn900 2y ago
  The difference is that those occupation friendly laws work and force real estate owners to actually rent out their properties rather than let them sit empty to appreciate value. Whereas the ideas of a person that only exist in a book are just ideas that exist in a book.
  - bdowling 2y ago
    Allowing occupation of vacant properties by squatters because there isn't enough housing supply is like allowing stealing food from farms because there isn’t enough food supply. It’s demoralizing to the producers and maintainers of the resource and does not encourage further investment in the activity.
    - zrn900 2y ago
      > Allowing occupation of vacant properties by squatters because there isn't enough housing supply is like allowing stealing food from farms because there isn’t enough food supply Love these religious-sounding sermons. Im telling what is happening here, a lot of 'free market' types are preaching to me that what is happening here is not happening and something else should be happening per the magic of 'free market' or capitalism or whatever. Hearing these, one understands who the US ended up with housing being unaffordable for 99% of Americans...
bdowling 2y ago
> Are landlords the most vulnerable people right now? Increasing risk will eliminate a lot of the "mom and pop" landlords (widows, former small-business owners, retirees, etc.). If it is too risky to own only a few extra condo units or a single small apartment building, then those properties will go to large corporate landlords. > there are people whose sole contribution to society is "owning flats". Landlords make sure the utilities (water, electricity, heat, etc.) work, that the roof doesn't leak, fix plumbing issues when they arise, take care of pest infestations, etc. Even landlords who don't personally fix things are employing managers and tradespeople. And with big corporate owners, the shareholders are usually pension funds which effectively are the retirement savings of people who have already "contributed to society".
- carlosjobim 2y ago
  Is it worth the major part of a full time worker's income to have somebody take care of those things in the rare occasion they happen? Most normal people can easily fix their plumbing issues, a leaky roof, termites and such in a couple of days with a few hundreds of dollars in budget. Landlords generally spend much less than 5% of their yearly rent income on maintenance. If they actually do something to improve an apartment, that is just an investment in their own real estate, that they own 100% even after having other people pay for it several times over during decades. Edit: Or look at it this way: Would you hire and pay somebody a good salary for working maybe 5 or 10 days per year for you?
  - bdowling 2y ago
    > that they own 100% You might be surprised to learn that many small rental properties are heavily mortgaged. Along with insurance and property taxes, the biggest cost is usually mortgage interest. Some owners even lose money for a few years until the rents rise to meet the costs so that they can break even. (These owners are playing the long game, believing that rent and property values will go up over time and eventually their investment will be a good one compared to their other investment options.)
    - 2y ago

harperlee 2y ago

> you're also making it more risky and thus less profitable to buy and rent out apartments You would be surprised about the sheer number of spaniards that would welcome this second-order effect. In the last ~10 years, renting has skyrocketed, due to the discovery of the spanish renting market by international money, and renting laws relaxation (demand side). Meanwhile, this has not increased the supply of homes, as it is felt that there is oversupply, the demand is very concentrated on selected cities, and the turnaround of building to rent or sell is long. This double-whammy has made renting quite onerous, and buying directly out of reach, for a lot of people. Some extra tidbits: - Buying: Upwards of 40% of home purchase is without mortgage (not a pattern of someone buying for the first time) - Renting: In Madrid, on average 62% of salary before taxes goes to renting; 58% in Barcelona (https://www.fotocasa.es/fotocasa-life/alquiler/los-espanoles-destinaron-casi-la-mitad-de-su-salario-al-pago-del-alquiler-en-2023/ https://www.fotocasa.es/fotocasa-life/alquiler/los-espanoles...) (how is that even feasible? well, young people end up just renting a room)

Manuel_D 2y ago
I think you misunderstood what the above commenter meant when they wrote that risk of squatters makes it "less profitable to buy and rent out apartments". Because of the additional risks of squatters, landowner will either have to take additional security measures (and make up the costs with higher rent) or accept the risk of squatters (and make up that risk with higher rent). In either case, the rent getsor expensive.
- harperlee 2y ago
  No, I got it. I just think that would mainly mean investors exit the market. If it is less profitable, they either further raise the prices or they get out of the market; the ratio of those two options depends on price elasticity. And prices don't have a lot of room to grow further in my opinion... unless of course the wages grow quickly (and minimum wage indeed has done it in the last 5 years). But then the country needs to be more productive or people get poor (fired!), which is also not good for the renting business, etc. At the end of the day you're betting on the spanish market either squeezing people further, or gaining productivity real quick. And real estate is not very liquid, yet is typically long-term, and those investors are risk averse. So... there will be some that will exit the market.

jorvi 2y ago

Currently there is a hard limit on how many properties per year can be built due to lack of construction workers + training positions for new workers + being sure of work in the next decade(s) due to economic cycles. Since the factor limiting supply is not cost or demand, prices keep ever-increasing with no gains for society; just filling the coffers of the haves. You should really watch out with insults of economic illiteracy :)

peter335 2y ago
I stand by my characterization, this comment is symptomatic of the same problem. That a country with high unemployment has the nr of workers in the construction sector as the major limitation in construction of new housing seems very implausible. What about zoning laws? To the extent a country with high unemployment can’t find enough construction workers it’s likely to be some kind of government/regulatory failure. Read Matthew Yglesias, he’s great
- zrn900 2y ago
  > That a country with high unemployment has the nr of workers in the construction sector as the major limitation in construction of new housing seems very implausible The rest of the world is not the US, and people don't have to work for dimes in jobs that can go away the next day just because they would starve or cant afford healthcare if they don't. As a result, people prefer stable jobs. If that sounds implausible to you, it is a sign of how perverted the mentality of your society has become that you expect people to be like disposable lemmings that will pour out to whatever pays them some money. > What about zoning laws? To the extent a country with high unemployment can’t find enough construction workers it’s likely to be some kind of government/regulatory failure. Read Matthew Yglesias, he’s great You don't know anything about the country that you speak about. You are referring to an American who has his ideas existing only in various books. Dont make holistic statements without knowing enough about what you are talking about. In this case, an entirely different country and society.
- jorvi 2y ago
  High unemployment? Boomers retiring will create a permanent labor shortage for the foreseeable future. People just don’t want to be construction workers, and who can blame them? Especially with how construction workers got screwed over after 2008. That nuked the construction sector so hard that employement in construction has just barely recovered to 2008 levels. It would be beautiful if housing was the pure demand-supply curve that many claim it is- but currently it isn’t. Letting the market solve the housing problem doesn’t create additional future housing as that is blocked by house construction output, all it does is allow maximizing profit on existing real estate. With the extreme anger and complete societal gridlock that the first world housing crisis is fomenting, if the fix was “just unregulate lol” politicians would have done that by now.

zrn900 2y ago

> Speaking as a Dane, this kind kind of economically illiterate leftist lawlessness is an important reason why Spain is poorer both poorer and has a worse welfare state than Denmark. If only Spain could profit from helping murder brown people in 3rd world countries overseas and by speculating on banking, then forcing the bailout of those sunken PRIVATE banks on other countries and then forcing them to privatize their national assets to buy those assets dirt cheap - like how Northern Europe did to Southern Europe, including Spain. Forcing the Spanish taxpayer to bail out sunken private Northern European banks and then forcing austerity on them to have them privatize their society. The biggest bank scam of the century in every way. And yet, all of you Northern Europeans seem to want to move south to that 'economically illiterate' society and its 'failing' welfare state for some reason. To the extent that you literally filled out some cities and zones. What you say and what you do contradict. > illiterate You don't know even the topic that you are talking about, yet you are talking about economic illiteracy. And the one thing that you have that you refer to, is an American author and its book. As if a random American author is the all-determining authority for anything. > you're also making it more risky and thus less profitable to buy and rent out apartments Okupas force the property owners to rent their properties to avoid losing them. It increases property available for rent - does not decrease it. Again, you don't know what you are talking about, and no, Matthew Yglesias, the glorious American author that you slapped everywhere in this thread as if he was a prophet, is not a reference that changes this particular phenomenon either. This is what happens where 'economically illiterate leftist lawlessness' doesn't exist. https://www.cbsnews.com/news/homes-for-sale-affordable-housing-prices/ https://www.cbsnews.com/news/homes-for-sale-affordable-housi...

nec4b 2y ago
>> If only Spain could profit from helping murder brown people in 3rd world countries overseas You mean like when Spain colonized Americas?
- zrn900 2y ago
  If only. Spain declared all Native Americans Spanish subjects with equal rights in 1519. Then they proceeded to hang in public any governor who violated those rights. That's why there are 7 million 'pure blooded' (whatever that means) Native Americans in South America today and there are races like Mexican. What's more, Spain treated the 'colonies' as parts of Spain and it spent all its money developing them. From the first university in the Americas to all kinds of hospitals, schools, infrastructure was built by the Spanish state with Spanish money. Thats why Spain lost the imperial race: Building up the locals instead of exploiting them - leaving aside not murdering them all to replace them like the Anglosaxons did.

yazzku 2y ago

100%. We have the stupidest housing laws. "economically illiterate leftist lawlessness" is the exact way to put this, and I myself usually tend towards the left.