3 ms·

Maybe you could securitize the value of the tenant's rent control, entitling an exiting tenant to a windfall if they are replaced by a higher-rent paying replac

by uvdiv 13y ago

Maybe you could securitize the value of the tenant's rent control, entitling an exiting tenant to a windfall if they are replaced by a higher-rent paying replacement? Can you clarify how this is different from simply prohibiting rental, forcing residents to own their apartment? A securitized right to property value increases sounds a lot like equity. edit: Oh I'm stupid. Clearly you mean all of this under price control: the renter gets the benefits of equity, without paying anything for them, and without taking on any risk of ownership (like property values collapsing). A complete soup of misincentives and disaster.

bcoates 13y ago
"Securitize" was the wrong word for me to use, as no uninvolved third party is coming into the picture. The difference between owning and renting is already a matter of degrees, particularly once you add rent control, mortgages, condos and HOAs into the mix. The renter already has the right to deprive the owner of the property value increase, this is just creating a legal framework to give it back for cash. I'm imagining it would only be part of the value of increase in rent over the rent-control limit, not all of it. It would increase market price rents modestly, as you're essentially depriving landlords of the power to shake off bad tenants by finding rent control loopholes or waiting them out, but you could offset that by creating a process for voluntary tenant buyouts. Buyouts are currently very difficult to carry out legally even if the tenant wants to leave and the landlord would rather replace them with someone paying more, leaving the two parties stuck together in an unhappy marriage as an unintended side effect of the way the laws work. In response to your edit: Of course you'd pay for them, new rentals are market-priced (then locked into rent control until that tenant leaves), aren't they? It's got one-sided risk like any option but those aren't hard to price. It's in everyone's interest to increase the future value of the rental unit.
- uvdiv 13y ago
  In that case (owners raising prices), who would want this? To renters it has the character of investment: pay more money today, for a possible payout in the future. I don't think typical renters want this. They're renting in part because they opt not to invest in real estate. They choose not to shift costs to the present.

by uvdiv 13y ago

bcoates 13y ago

"Securitize" was the wrong word for me to use, as no uninvolved third party is coming into the picture. The difference between owning and renting is already a matter of degrees, particularly once you add rent control, mortgages, condos and HOAs into the mix. The renter already has the right to deprive the owner of the property value increase, this is just creating a legal framework to give it back for cash. I'm imagining it would only be part of the value of increase in rent over the rent-control limit, not all of it. It would increase market price rents modestly, as you're essentially depriving landlords of the power to shake off bad tenants by finding rent control loopholes or waiting them out, but you could offset that by creating a process for voluntary tenant buyouts. Buyouts are currently very difficult to carry out legally even if the tenant wants to leave and the landlord would rather replace them with someone paying more, leaving the two parties stuck together in an unhappy marriage as an unintended side effect of the way the laws work. In response to your edit: Of course you'd pay for them, new rentals are market-priced (then locked into rent control until that tenant leaves), aren't they? It's got one-sided risk like any option but those aren't hard to price. It's in everyone's interest to increase the future value of the rental unit.

uvdiv 13y ago
In that case (owners raising prices), who would want this? To renters it has the character of investment: pay more money today, for a possible payout in the future. I don't think typical renters want this. They're renting in part because they opt not to invest in real estate. They choose not to shift costs to the present.