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Even the Rich Are Being Priced Out of Central London

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Re: Even the Rich Are Being Priced Out of Central London

#161

Post by aianus »

TheSpiceIsLife wrote: post #137

Can anyone explain the purported benefits to society of allowing non-resident foreigners to own residential property? Who is this supposed to benefit? I mean, other than real estate agents, solicitors / conveyancer, and the initial citizen who sold the property. What prevents us (whoever 'us' is in your case) from banning foreign non-resident residential property ownership.

> the initial citizen who sold the property

These people are pensioners (or soon-to-be) who:

a) vote in droves b) need to flip their houses at a huge profit to pay for their retirements because they don't have enough savings otherwise

> Can anyone explain the purported benefits to society of allowing non-resident foreigners to own residential property?

It's an easy and popular (amongst voters!) way to have foreigners pay for the care of your aging population. I'm not surprised at all there's little political will to stop it.

Re: Even the Rich Are Being Priced Out of Central London

#162

Post by ghughes »

ryandrake wrote: post #159

The problem is not specific to foreign investors. Local investors are also more than capable of buying up perfectly good homes and letting them sit there vacant and unused. Whether the people are foreign has nothing to do with it. The problem is that society tolerates this practice of investors swallowing up housing, pricing people out of the market, and then leaving perfectly those good homes vacant. Couldn't the so…

So your solution is to put an end to the rental market?

Re: Even the Rich Are Being Priced Out of Central London

#163

Post by [deleted] »

ryandrake wrote: post #159

The problem is not specific to foreign investors. Local investors are also more than capable of buying up perfectly good homes and letting them sit there vacant and unused. Whether the people are foreign has nothing to do with it. The problem is that society tolerates this practice of investors swallowing up housing, pricing people out of the market, and then leaving perfectly those good homes vacant. Couldn't the so…

[deleted]

Re: Even the Rich Are Being Priced Out of Central London

#164

Post by GreaterFool »

ddalex wrote: post #145
ferentchak wrote: post #138

Earlier quoted context omitted.

I guess I am confused why they would not want to collect the money from renting the buildings out. Any ideas?

They don't care. When you have billions in the personal bank accounts, the few tens of thousands you would collect per month from a luxury house in London means nothing. It would be more of a nuisance - the tenants need registering, then you have to pay taxes, for what gain?

You hardly have to do anything. Various agencies will do everything for you. You'll never hear about your tenants.

Re: Even the Rich Are Being Priced Out of Central London

#165

Post by pen2l »

jlebar wrote: post #157
mtkd wrote: post #68

I walked from Kings Cross to Marylebone at dusk recently - half way, I took the road up from the main Euston Road - walking through mostly residential - barely an apartment window with a light on - it's just money parked in property - the parks don't have kids playing in them any more The recent Vancouver tax changes have worked, I suspect/hope we'll start seeing that repeated in every city thats had it's life sucked…

In the US, the federal government has acted in a big way to prop up home prices when they threatened to fall. It's hard to imagine how we can have it both ways: If the government effectively insures real estate against loss, then investors (i.e., people with money) will take advantage of that, increase demand, and raise the price of the investments (i.e., houses you and I want to buy).

hkmurakami made a very astute comment a few days ago about this:

    > It seems that we made a pact with the devil by positioning housing as an
    > investment asset. By doing so, we've encouraged people to commit a very large
    > fraction of their net worth into a rather illiquid asset, tying their financial
    > fates to the future assessment of that asset. As a result, protecting the price
    > and appreciation of this asset has come to overshadow the other crucial roles
    > that housing plays in our society.
    > If I bought shares in AAPL at $50 (now
    > $100+) and someone comes along asking that AAPL let them buy some shares for
    > say, $65, I'm obviously not going to be happy since the value of my investment
    > is under threat. This is the kind of reaction we've unfortunately promoted for
    > ourselves. It didn't have to be this way, as other countries have shown us.
    > But now that we're here, it's hard to imagine a way to turn back time.
I live in Boston. My peers and family are pouring out their savings of the last 10 years to buying property in Quincy and Jamaica Plains because they feel it'll gentrify soon and in another 10 years they'll be making good money from it (by either renting or selling). I feel extremely conflicted about this. I think they're probably right.

This housing situation is the most fucked up thing I know of, and I just cannot think of any happy answers to solve these problems for the benefit of everyone in society - it seems any and every decision will favor one party and fuck the other.

Re: Even the Rich Are Being Priced Out of Central London

#166

Post by valkea »

r00fus wrote: post #112
valkea wrote: post #104

Earlier quoted context omitted.

Foreign capital investment is great, so beneficial to the economy. The problem is with the housing market. Perverse subsidies, out of date zoning laws, and a lot of nimby based lobbying. Fix these things and I doubt anyone, including foreign investors, would be parking capital in property and just leaving it unused.

And that's why you use a tool like taxation to modify behavior to encourage positive outcomes.

Taxation shouldn't be used as a tool to modify behavior. That's actually the exact opposite of good tax policy. Taxes should be broad based, with few exemptions, to raise the needed revenue while minimizing side effects.

The distortions in housing markets are often partially caused by tax policy, and those areas should be addressed (tax deductions for mortgage interest for example). Other than that, it's best to actually deal with the root problem: outdated zoning laws.

Re: Even the Rich Are Being Priced Out of Central London

#167

Post by pjlegato »

ghughes wrote: post #162
ryandrake wrote: post #159

The problem is not specific to foreign investors. Local investors are also more than capable of buying up perfectly good homes and letting them sit there vacant and unused. Whether the people are foreign has nothing to do with it. The problem is that society tolerates this practice of investors swallowing up housing, pricing people out of the market, and then leaving perfectly those good homes vacant. Couldn't the so…

So your solution is to put an end to the rental market?

True. How about a punishing tax on any kind of unoccupied property, rather than specifying that it must be owner-occupied?

Re: Even the Rich Are Being Priced Out of Central London

#168

Post by pjlegato »

GreaterFool wrote: post #164
ddalex wrote: post #145

Earlier quoted context omitted.

They don't care. When you have billions in the personal bank accounts, the few tens of thousands you would collect per month from a luxury house in London means nothing. It would be more of a nuisance - the tenants need registering, then you have to pay taxes, for what gain?

You hardly have to do anything. Various agencies will do everything for you. You'll never hear about your tenants.

The point is, why would they bother even with the minute hassle of vetting and hiring an agency just to make a few pennies every year as compared to their existing billions?

It's not even worth their time to do that much, apparently, since the houses in question are sitting empty in a high-rent area.

Re: Even the Rich Are Being Priced Out of Central London

#169

Post by astazangasta »

ryandrake wrote: post #159

The problem is not specific to foreign investors. Local investors are also more than capable of buying up perfectly good homes and letting them sit there vacant and unused. Whether the people are foreign has nothing to do with it. The problem is that society tolerates this practice of investors swallowing up housing, pricing people out of the market, and then leaving perfectly those good homes vacant. Couldn't the so…

A land value tax (famously advocated by early political economist Henry George of San Francisco) does exactly this: you tax the unimproved portion of the value of property, and don't tax improvements. Land that has high value unimproved therefore costs money to sit idle; this encourages landlords to make improvements, rent out their space, etc. It also means landlords don't benefit from the portion of value that does NOT stem from their improvements, i.e., it discourages speculation.

Re: Even the Rich Are Being Priced Out of Central London

#170

Post by ryandrake »

pjlegato wrote: post #167
ghughes wrote: post #162

Earlier quoted context omitted.

So your solution is to put an end to the rental market?

True. How about a punishing tax on any kind of unoccupied property, rather than specifying that it must be owner-occupied?

Yea, that sounds like a better idea.
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