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Rising Rents Are Pushing More Tenants Past the Breaking Point

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Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#111

Post by slededit »

jpollock wrote: post #102
mrow84 wrote: post #83

Earlier quoted context omitted.

> The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. Are there any risks that affect only the landlord, and not the renter, other than the possibility of losing ownership? For example, if you rent a plot of land for farming, what risks does the owner of that land face that you do not?

The owner risks the tenant destroying the capital value of the property. http://www.cbc.ca/news/canada/ottawa/multimedia/rental-unit-... http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&o... In the US with civil forfeiture, the police can seize the property. https://www.cannalawblog.com/asset-forfeiture-why-your-marij...

Remember that Canada has civil forfeiture too: https://beta.theglobeandmail.com/news/national/civil-forfeit...

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#112

Post by carradjm »

_wc0m wrote: post #9

Rent is an amazingly effective means of redistributing wealth upwards. I have easily paid over £100k rent in my life, always to people substantially richer than I am. Always enjoyed this Churchill quote - from 1909! Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -- and all the while the landlord sits s…

https://en.wikipedia.org/wiki/Georgism

That quote is the exact reason that land needs to be taxed at a much higher rate than it's currently taxed. Notice I say "land", so that doesn't include anything built on that land.

The value of land is directly tied to the desirability of the land around it. Land in Manhattan is more valuable than land in the middle of South Dakota because of all the network effects of other people (and the government) building things in Manhattan.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#113

Post by megaman22 »

moultano wrote: post #44
mindcrime wrote: post #20

Earlier quoted context omitted.

So what's your point? Do you want to eliminate rent? Should people who either can't afford to purchase a house, or who simply don't want to, be forced into homelessness? Personally I've paid over $115,000 in rent over the past 12 years, but I don't begrudge my landlord their money. I attained utility in exchange for the rent I paid, and have no problem with the arrangement. Not, of course, to say that I'm happy when…

Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes.

I don't understand how a land value tax is supposed to make rents lower. It doesn't really compute.

As a landlord, I have a mortgage of $X and taxes of $Y, and insurances, maintenance and other liabilities that total up to $Z, for operating costs on a piece of property.

For this to make any sense at all, $Rent >= $X + Y$ + $Z.

If you increase the taxes $Y (and this would, realistically, be done more or less uniformly across a town or municipal region, so all properties are going to be in the same boat), all you've done is make me have to charge a correspondingly higher rent. Rounded up to the nearest $25 or $50, because that's how it is always done. Meanwhile all the other owners of rental properties are in the same position.

Hooray!

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#114

Post by xvedejas »

DougWebb wrote: post #94
moultano wrote: post #44

Earlier quoted context omitted.

Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes.

So, where exactly does the wealthy landlord get the money to pay the land-value tax? From their own labor? From their savings? From after-tax interest earned on their other investments? Of course not! They're going to raise the rent to cover the additional tax, and if the renter can't afford it screw them; they'll be kicked out and replaced with someone who can. This comes up a lot in discussions involving income ine…

The effect of a tax on land works differently than other taxes do. Because the land value tax will free up supply (which was previously held for speculation), the result could just as easily be that rents drop. This is the entire reason that this tax is attractive, and you are right that without this feature, the tax would not make sense.

https://en.m.wikipedia.org/wiki/Land_value_tax#Real_estate_v...

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#115

Post by billmalarky »

mrow84 wrote: post #83
billmalarky wrote: post #40

Earlier quoted context omitted.

> He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived. The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. This is why offloading the risk onto creditors (ie purchasing real estate with borrowed money under an LL…

> The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. Are there any risks that affect only the landlord, and not the renter, other than the possibility of losing ownership? For example, if you rent a plot of land for farming, what risks does the owner of that land face that you do not?

A renter's financial risk is limited to his/her lease agreement. This could be the remainder of the rent due according to the lease (ie if there are 6 months left on the lease agreement you will need to pay 6X rent). In practice typically a renter is usually on the hook for the security deposit or a month's rent, so long as they can find another renter to take over their lease.

The owner assumes the total risk for the property.

As a basic example, consider starting a lease vs buying a property in 2007. If you were a renter when the real estate market collapsed in 2008 you were stuck paying higher than the market rate (most likely) until your lease ended, at which point your rent probably dropped to market rate. No biggie.

If you bought property at the top of the market in 2007 for say $500k, and the value of that property dropped to $250k in 2008, you are now paying a $500k mortgage payment for a property worth half that amount. Rent used to cover your mortgage payment but now the market rate for rent in the same property has halved so now instead of breaking even every month on your property you have to pay $1,000 a month for someone else to live in your property just to not default on the mortgage. Odds of having to declare bankruptcy in this scenario are high.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#116

Post by yourapostasy »

moultano wrote: post #44
mindcrime wrote: post #20

Earlier quoted context omitted.

So what's your point? Do you want to eliminate rent? Should people who either can't afford to purchase a house, or who simply don't want to, be forced into homelessness? Personally I've paid over $115,000 in rent over the past 12 years, but I don't begrudge my landlord their money. I attained utility in exchange for the rent I paid, and have no problem with the arrangement. Not, of course, to say that I'm happy when…

Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes.

I would rather find some mechanism that separates everyone who wants to just earn towards a shelter that they can stick around in when they reach their old age, all into one market, and ring-fence everyone else with a profit motive into their own market where they can duke it out among themselves the real estate game.

For example, the capitalization and sophistication of commercial players lets them efficiently and systematically harangue tax assessors into lowering property taxes far below what normal individuals with just their own residential property can accomplish. Those kinds of advantages accrue in many other areas, and are out of reach of individuals due to sheer scaling differences. But it's the individuals that incur lots of collateral damage over the course of a long period.

LVT is part of a solution, but I'm still looking for a way to address that scaling differential. I think housing co-ops are onto the start of such a solution, but I'm not convinced in their current form that they are appropriate to use for addressing the scaling issue.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#117

Post by natrius »

DougWebb wrote: post #94
moultano wrote: post #44

Earlier quoted context omitted.

Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes.

So, where exactly does the wealthy landlord get the money to pay the land-value tax? From their own labor? From their savings? From after-tax interest earned on their other investments? Of course not! They're going to raise the rent to cover the additional tax, and if the renter can't afford it screw them; they'll be kicked out and replaced with someone who can. This comes up a lot in discussions involving income ine…

Landlords do not set market rents. Renters and their employers do. Tax changes do not raise or lower rents. They make it more or less likely that new housing will be built, which affects future rents.

Land value taxes are so attractive because they avoid changing the incentives to build.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#118

Post by humanrebar »

switch007 wrote: post #11
hackermailman wrote: post #10

Rising rents doesn't seem to effect the number of applicants though, every time I've viewed a place here there was a lineup of 20+ other renters there waiting as well. They pushed us through in under 10 minutes then another 20+ people showed up for the second appointment already gathering outside. There was no time to dispute the lease they dangled which stipulated you had to vacate the day the lease expired in order…

I wonder if breaking point be when rents exceed the means of 2 people? Something like 60% of their combined take home pay.

In urban centers, you'll just see three or four professionals per family home or apartment. The families will leave town, either to the suburbs with a soul-crushing commute or to a smaller city.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#119

Post by dpatru »

mrow84 wrote: post #83
billmalarky wrote: post #40

Earlier quoted context omitted.

> He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived. The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. This is why offloading the risk onto creditors (ie purchasing real estate with borrowed money under an LL…

> The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. Are there any risks that affect only the landlord, and not the renter, other than the possibility of losing ownership? For example, if you rent a plot of land for farming, what risks does the owner of that land face that you do not?

If farmer renting land can decide year-to-year whether it is worth it to him to farm the land. If the renter determines that a particular lease is not profitable, he is free to do something else. The landowner has no such option; he's stuck with the land.

The renter generally pays a higher price per year than an owner but has greater options and less risk.

This is generally true of renting vs buying. If you go to distant city for a one-week vacation, you are likely to rent accommodations and a car rather than buy them. At the end of the week you can just walk away, whereas the owner must concern himself with generating an income with his property.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#120

Post by pc86 »

moultano wrote: post #44
mindcrime wrote: post #20

Earlier quoted context omitted.

So what's your point? Do you want to eliminate rent? Should people who either can't afford to purchase a house, or who simply don't want to, be forced into homelessness? Personally I've paid over $115,000 in rent over the past 12 years, but I don't begrudge my landlord their money. I attained utility in exchange for the rent I paid, and have no problem with the arrangement. Not, of course, to say that I'm happy when…

Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes.

Please explain how this additional tax isn't immediately (at the next least signing) passed on to renters. If I rent out a property and the taxes go up $X, I will raise rent at least 1x.
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