Why Rent Control Doesn't Work • Hacker News Board

Re: Why Rent Control Doesn't Work

#91

Post by aeternus » Tue, Apr 09, 2019, 6:51 AM UTC

solatic wrote: post #85

aeternus wrote: post #24

Earlier quoted context omitted.

Use a land value tax, and update it frequently. If rents are going up in an area, then the land value is increasing and taxes should go up accordingly. This also removes the disincentives around making property improvements. It makes little sense for cities to penalize people for renovating and improving property. It also adds healthy competition among landlords/owners and encourages higher density in places where la…

Israeli property tax is different than in the US. In the US, property taxes are levied upon property owners, but in Israel, property taxes are levied directly upon residents - owners who are landlords pay no property tax in Israel so long as tenants are paying the tax. The advantage of the Israeli system is that it allows the government to offer steep discounts on property rent to protected classes, i.e. senior citiz…

A better solution would be to take the total amount spent on that senior citizen property tax discount and instead give it to all seniors in the form of a general tax credit. You don't need a strange form of property tax to help out seniors. In fact it seems unlikely the property tax benefit is at all fair since it likely benefits those with large homes.

A general tax credit could be distributed more fairly and would allow seniors to choose to spend it on rent, but also allow the option of moving somewhere different/cheaper, or spend it on a greater want/need.

The land value tax is still important as it incentivizes development and density where it makes sense. Landlords cannot sit back and rent-seek. If developers around them are making the area nicer, they will soon be priced out unless they follow suit. Similarly, as demand & density increase, area tax revenues also increase allowing for the building of infrastructure to handle the higher density.

Re: Why Rent Control Doesn't Work

#92

Post by true_religion » Tue, Apr 09, 2019, 6:52 AM UTC

solatic wrote: post #86

true_religion wrote: post #22

Earlier quoted context omitted.

Zoning should take into account rental status. So an area can be zoned for primary home ownership or home rental. Thus if you have your secondary unoccupied residence in that zone, then it would be a zoning violation so you must live in it or rent it out.

Most of the ghost homes are owned by foreigners for whom that is their sole residential property in Israel. Penalizing the purchase of additional units is ineffective. Furthermore, even if you could figure out a way to set up zoning regulations to achieve these aims, how would you penalize violations? Fines are just factored into the cost of ownership, just like the taxes on empty apartments.

If you continue to commit a business zoning violation then your business is taken away or obstructed. As far as the government is concerned what follows is just normal beaurocracy

Re: Why Rent Control Doesn't Work

#93

Post by solatic » Tue, Apr 09, 2019, 8:51 AM UTC

aeternus wrote: post #91

solatic wrote: post #85

Earlier quoted context omitted.

Israeli property tax is different than in the US. In the US, property taxes are levied upon property owners, but in Israel, property taxes are levied directly upon residents - owners who are landlords pay no property tax in Israel so long as tenants are paying the tax. The advantage of the Israeli system is that it allows the government to offer steep discounts on property rent to protected classes, i.e. senior citiz…

A better solution would be to take the total amount spent on that senior citizen property tax discount and instead give it to all seniors in the form of a general tax credit. You don't need a strange form of property tax to help out seniors. In fact it seems unlikely the property tax benefit is at all fair since it likely benefits those with large homes. A general tax credit could be distributed more fairly and would…

It's not just senior citizens, it includes: people on a qualifying fixed income, food stamp recipients, Social Security payment recipients, disability payment recipients, Holocaust survivors, single-parent households, households with members who have died or have permanent disability due to terrorism or state service, non-Jews with Righteous Among the Nations status, the legally blind, people who were prisoners of war, people who were "Prisoners of Zion" / ex-Soviet refuseniks, new immigrants in their first year of residency, parents of disabled children, people in active service in the military or alternative civilian service. If you fit one of the categories then it's generally a pain to assemble the necessary documentation to get the discounts, but once you do, you don't really need to renew the status (excepting soldiers/servicepeople).

General / flat tax schemes for situations like this tend to be regressive.

> Landlords cannot sit back and rent-seek. If developers around them are making the area nicer, they will soon be priced out unless they follow suit.

So, separately from the ghost town situation in Jerusalem, there's a phenomenon in Tel Aviv where there is undeveloped beachfront property worth literally hundreds of millions of dollars with some one-story house sitting on the land and falling apart. If you delve into the reasons why it hasn't been sold to a developer, you find out that the original purchasers have several generations of inheritors, with ownership divided among thousands of people. Because those thousands of people can't unanimously agree on who to sell their shares to and at what price, the land sits undeveloped, and the situation gets worse over time as the current owners have children of their own and the current owners' miniscule shares get divided even further. Many of these properties are locked up in court battles with family members trying to sue to force the sale of shares by some third or fourth cousin they barely know.

When people are literally looking at hundreds of thousands of dollars for their ownership stake, and they still can't sell, how is the financial incentive established by the LVT any different in terms of being able to bring about a result in getting the land developed?

Re: Why Rent Control Doesn't Work

#94

Post by turtlecloud » Tue, Apr 09, 2019, 9:34 PM UTC

solatic wrote: post #18

neilwilson wrote: post #6

Supply side markets work when they defeat the power of hoarding. Pick any market, and if sitting on the item makes you money in the long term, rather than putting it to use then you have a monopoly problem of some sort. For a market to work, it must always be the case that using the item to cause some socially useful economic flow to happen is more profitable than sitting on it, or trading your hoard with other hoard…

> Keeping an apartment empty and outside the housing services supply market should be cripplingly expensive. Jerusalem tried this. Lots of apartments owned by wealthy foreign landlords who only occupy the apartments once or twice a year, if that, on holiday, transforming large sections of the city into ghost neighborhoods. https://www.timesofisrael.com/jerusalem-ups-ghost-apartment-... It hasn't worked. Odds are that…

There just needs to be more squatters to avoid empyy apartments

Re: Why Rent Control Doesn't Work

#95

Post by ptaipale » Wed, Apr 10, 2019, 7:23 AM UTC

aliswe wrote: post #90

ptaipale wrote: post #36

Earlier quoted context omitted.

In addition, it encourages inefficient use of existing housing.

Like me not finding incentive for renting out my existing apartment when I'm out of town?

Not really a problem. A more significant thing is not finding incentive to move to a 2-room apartment after kids have grown up, because regulated price of your 6-room apartment is same as the 2-room would be.